Changes to the DOL’s Overtime Exemption Rule

We came across the article, “Five Things Employers Should Know About The DOL’s New Overtime Rule” by Ellen E. Hoeppner, found on www.clarkhill.com. It highlights the changes to the Fair Labor Standards Act’s (FLSA) overtime exemption rules made by the U.S. Department of Labor. Below are the five noted facts that will give employers a better understanding of how to comply with these new rules.

1. The salary level for employees to qualify for the executive, administrative, and professional (EAP) exemptions will increase to $679 per week, which is equivalent to $35,308 annually. This is much higher than the current salary minimum of $23,660 annually.
2. The salary level to qualify for the highly compensated employee exemption will increase to $147,414 per year. This is an increase of almost $50,000!
3. Some additional income, such as nondiscretionary bonuses and incentive payments, can count towards an employee’s salary level. That said, this can only count for up to 10% of the worker’s salary to meet the minimum salary required for exemption.
4. The DOL proposed that the salary level for exemption will increase every four years going forward. Their proposal states that the public will have an opportunity to influence the extent of increase.
5. In addition to salary, job duties are considered when determining if an employee is a candidate for an exemption. Employees must meet the salary requirement and a specific job description provided by the FLSA to be exempt. There will be no changes to the test that determines if an employee’s job duty is included.

As a final thought, the article notes that the DOL plans for these rules to become effective in 2020. It is important to keep in mind that it may take more time due to possible legal challenges.