On March 7, 2019, the Department of Labor (DOL) proposed revisions to the Fair Labor Standards Act (FLSA) white collar exemption rule. The DOL is proposing a minimum salary threshold to increase to $679 per week (which equals an annual salary of $35,308). The threshold currently sits at $455 per week ($23,660 annually). Wage and hour enthusiasts will be quick to recognize that this is not the DOL’s first go-around with raising the threshold, which was put on hold due to a Federal District Court injunction back in 2016. With an anticipated effective date of January 1, 2020, this proposal signals the Department’s desire to bring the required salary amount to a dollar figure more representative of modern-day wages.
The new salary threshold is nearly $12,000 higher than the current rate, but is also about $12,000 less than the DOL’s last rule. Time will tell whether or not this middle ground will be acceptable to states around the country seeking to protect industries of lower wage earners. Despite much speculation, regional adjustments based on cost-of-living variances around the country were not included in the proposal.
Automatic inflators were not inserted to raise the amount over time, but the rule proposes that the DOL will update the minimum threshold every four years. Up to ten percent of the minimum salary level may be made up of non-discretionary bonuses and commissions. Not surprisingly, the job duties test was not touched by the proposed rule.
Keep in mind that the minimum salary threshold only applies to those exempt employees who are also classified as meeting the requirements of the primary duties exemption (e.g., executive, administrative, professional). For positions like school teachers, whose FLSA overtime exemption is uniquely set to the title of the position, the increase in minimum salary threshold will not apply.
Hurry up and wait. Since the rules are only in proposal format, a 60-day public comment period followed by a time of digestion and reaction to those comments will delay any finalization until well into the summer at the earliest. Partisan in-fighting and legal challenges will also test the DOL’s ability to meet its time-frame.
Given that change seems to be inevitable, employers would be wise to audit their exempt workforce now to first determine whether or not their white collar exempt status classifications are accurate. If the job duties tests don’t warrant any immediate adjustments, employers should next look to see which employees will be affected by the increase in salary threshold and begin to form a strategy to determine whether or not it makes sense, from both a budgetary and staffing standpoint, to raise salary or reclassify as a non-exempt employee. If the January 1, 2020, effective date holds, employers may not have a great deal of time to adapt once the rules are finalized. Stay tuned.
Bret works with HR professionals to ensure they have a clear understanding of the rules governing all aspects of human resources. He works with employers to maintain compliance of health and wellness benefit packages under state and federal guidelines, including rules of taxation and healthcare refo
Bret works with HR professionals to ensure they have a clear understanding of the rules governing all aspects of human resources. He works with employers to maintain compliance of health and wellness benefit packages under state and federal guidelines, including rules of taxation and healthcare reform. Bret holds a bachelor of science in economics from the University of Kentucky and a law degree from the University of Pittsburgh, School of Law.
On May 11, 2014, the governor of Minnesota signed the Women’s Economic Security Act (WESA), a bill that will require Minnesota employers to make dramatic changes to their employment policies and practices.
While WESA directly impacts employers who conduct business in Minnesota, the changes follow plans by federal and local governments to expand legal protections for women and other employees. For this reason, employers in other jurisdictions should pay close attention to these national and state law trends.
The Family Medical Leave Act (FMLA) is more than 20 years old, yet employers have many questions on how the law applies to their workforce. Unfortunately, mistakes in the application can have significant business and legal consequences.
Making FMLA mistakes can be costly, and many employers make mistakes they don’t even know they are making. Let’s take a look at five common leave-of-absence mistakes based on our experience with real clients from our HR Hotline.
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