The U.S. Department of Labor just announced the new salary threshold for exempt employees.
Effective January 1, 2020, the salary threshold for an employee to be classified as exempt from the Fair Labor Standards Act (FLSA) minimum wage and overtime requirements will be raised from $455 per week ($23,660 annually) to $684 per week ($35,568 annually).
In addition to the salary threshold, the employee’s position will still need to meet the applicable duties test. The duties tests will remain the same. Nondiscretionary bonuses and incentives (including commissions) that are paid at least annually may be used to satisfy up to 10 percent of the employee’s salary in meeting the new threshold.
Additionally, the threshold for an employee to be considered “highly compensated” will be changed from $100,000 annually to $107,432.
The changes only apply to the executive, administrative, professional, and highly compensated employee exemptions.
Next Steps for Employers
Employers should review the compensation of all exempt employees to ensure they meet the new threshold of $684 per week / $35,568 annually.
Employees who do not meet the threshold will either need to be classified as non-exempt and therefore subject to overtime and minimum wage requirements or their salary must be increased to at least the new minimum threshold amount effective January 1, 2020.