On September 27, 2019, the DOL published final regulations that increase the salary thresholds used to determine if executive employees, administrative employees, and professional employees must be paid overtime. As background, the Fair Labor Standards Act (“FLSA”) requires covered employers to pay employees a minimum wage and, for employees who work more than 40 hours in a week, overtime premium pay of at least 1.5 times the regular rate of pay. The FLSA’s so-called ‘‘white collar’’ exemption, however, exempts from those minimum wage and overtime pay requirements ‘‘any employee employed in a bona fide executive, administrative, or professional capacity.’’ The FLSA delegates to the DOL the authority to define the exemption’s terms.
For the exemption to apply to an individual, one requirement is that his or her salary must meet a minimum specified amount (i.e. the ‘‘salary level test’’). These final regulations, which become effective on January 1, 2020, increase the minimum weekly salary under the salary level test to $684 per week ($35,568 per year for a full-time worker). The previous amount equaled $455 per week ($23,660 per year for a full-time worker). These regulations also exempt certain highly compensated employees whose total compensation exceeds $107,432 per year, which is an increase from the previous level of $100,000 per year.
Employers may wish to consult with their labor and employment attorney to discuss how the final regulations will affect their compensation practices, as the above is only a very brief summary of some applicable rules.
In the ERISA context, these regulations will likely change the number of workers who are eligible for overtime pay. That might result in increased retirement plan contributions (depending on whether a retirement plan includes or excludes overtime payments when calculating employees’ contributions and the employer’s contributions).
Here is a link to the final regulations: https://www.govinfo.gov/content/pkg/FR-2019-09-27/pdf/2019-20353.pdf