DOL New FLSA Rules – 4 Key Points for Employers and Employees to Know
Last month, the U.S. Department of Labor (DOL) has finally announced its final rules to update the federal overtime regulations governing which employees are entitled to minimum wage and overtime pay under the Fair Labor Standards Act (FLSA) by increasing the salary level required under the executive, administrative and professional white collar exemptions. The final rules are effective as of January 1, 2020.
Here are 4 key provisions of the new rules that both Employers and Employees should understand:
- The DOL raises the “standard salary level” from the current level of $455 to a new level of $684 per week (equivalent to $35,568 per year for a full-year full-time worker). This is a 50 percent increase. Employees under this wage must remain eligible for overtime, regardless of job title or duties.
- The rules raise the total annual compensation level for exemption from minimum wage and overtime requirements for so-called “highly compensated employees” exemption from $100,000 to $107,432 per year. You may not exempt an employee as “highly compensated” unless they make at $107,432 annually.
- The rules allow employers to use non-discretionary bonuses and incentive payments (including commissions) – as long as they are paid at least annually – to satisfy up to ten percent of the standard salary level, over a 52-week period.
- The final rules do not (a) make any changes to the job duties tests for executive, administrative, and professional employee exemptions, or (b) provide for automatic cost of living adjustments to the salary thresholds.
Please contact Fournier Legal Services at 860.670.3535 or jfournier@jeflegal.com if you have any questions related to compliance with the new law, or any other matters related to your employees or your business.
Joseph E. Fournier is an Attorney and a CPA who has more than twenty years of experience in a variety of business legal matters, including start-ups and company formations, drafting shareholder and operating agreements, contracts, employment law, commercial litigation, tax planning and audit defense, and mergers and acquisitions (M&A). He also handles estate planning matters, such as business succession planning, wills, trusts, and probate.