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The Department of Labor (DOL) has published a final rule updating the earnings thresholds for white-collar exemptions to the overtime pay requirements of the Fair Labor Standards Act (FLSA). The new thresholds account for growth in employee earnings since the exempt salary levels were last updated in 2004. No changes were made to the duties test.

The final rule:

  • Raises the “standard salary level” from $455 per week to $684 per week (equivalent to $35,568 per year for a full-year worker).
  • Raises the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year.
  • Allows employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices.
  • Revises the special salary levels for workers in U.S. territories and in the motion picture industry.

Employers must comply with the final rule beginning on January 1, 2020. The DOL has noted that it intends to revisit the salary threshold more regularly; however, no timetables for review were included in the final regulations.

The new rule is a departure from the Obama administration’s proposal, which was invalidated by a district court judge in 2017. At that time, the DOL had proposed an increase to the salary threshold for employees eligible for overtime pay from $23,660 to $47,476. The judicial ruling stated that the DOL had overstepped its bounds when crafting the rule in 2016.

The DOL has posted several helpful fact sheets, e-tools and slide presentations, frequently asked questions, and other materials on the new rule on its overtime resource page.

CUPA-HR’s 2019 Professionals in Higher Education Annual Report offers a practical overview of campus professional positions most likely to be impacted by the new salary thresholds.

Contact

Mary Bachinger

Director, Tax Policy

202.861.2581


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