By Lee Allphin, Employer Advantage Founder and Chairman of the Board
The United States Department of Labor (DOL) has released the long-awaited new rule for Salaried Exempt employees. You may also know this as the “White Collar Exemption Rule” or the “Overtime Rule.” Employers are required to comply by January 1, 2020, but it isn’t too soon to begin to review your salaried exempt positions and plan for any changes.
Here are the Highlights of the New Overtime Rule:
- The new minimum wage for a Salaried Exempt employee is $35,568 annually, or $684 per week.
- The duties tests remain unchanged.
- The effective date is January 1, 2020.
- Nondiscretionary bonuses and incentive payments (including commissions) paid on an annual or more frequent basis may be used to satisfy up to 10 percent of the standard salary level.
According to the DOL website, there is a “wide range of options” for responding to changes to this salary level. Employers could:
1) Raise salaries to maintain the exemption
2) Pay current salaries with overtime after 40 hours
3) Reorganize workloads and share the work hours
4) Adjust wages
In Recent History:
In 2016, President Obama directed the U.S. Department of Labor (USDOL) to revise the regulations governing this outdated rule in the Fair Labor Standards Act (FLSA). The resulting proposal would have more than doubled the salary threshold and essentially applied a formula to update the amount every three years. This minimum threshold of $913-per-week was set to become effective on December 1, 2016, and the updating would begin on January 1, 2020.
Several states and business groups sought to block this rule from taking effect and, at the last minute, a federal court issued a preliminary injunction preventing the rule from being implemented on a nationwide basis. In the end, a Texas court in August 2017 put the final nail in the Overtime Rule 1.0’s coffin by striking down. Since then, employers have been patiently awaiting a revised rule. Today, this work has culminated in the release of Overtime Rule 2.0.
Will This Rule Survive?
Because of the last-minute injunction blocking the 2016 proposal, we understand it would be natural for employers to hesitate to adjust to these changes. There is certainly a chance another court will once again block these changes. But while there is always a chance for litigation to unfold in such a way that it would impact the implementation of this rule, Employer Advantage suggests you prepare to comply as if this rule will go into effect as planned on January 1, 2020.
We Can Help You Prepare:
We understand employers of all types have a heavy load when it comes to compliance. Employer Advantage can manage the review process and help businesses get ready in the most cost-effective manner.
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About Employer Advantage
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