News & Updates

DOL Announces New Salary Threshold for White Collar Exemptions

9/26/2019

On September 24, 2019, the U.S. Department of Labor announced that effective January 1, 2020, the salary threshold for an employee to be exempt from overtime under the administrative, executive, professional, and computer exemptions of the Fair Labor Standards Act will increase from $455 per week to $684 per week (or $35,568 per year).
 
For employers, this new threshold means that employees who are currently exempt and earn a salary of less than $684 per week will, in most cases, become non-exempt. The change is expected to impact an estimated 1.2 million workers.
 
Other less significant (but still important) changes the DOL announced (also effective January 1, 2020):
 
Raising the total annual compensation requirement for “highly compensated employees” from the currently enforced level of $100,000 per year to $107,432 per year;
 
Allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level, in recognition of evolving pay practices; and
 
Revising the special salary levels for workers in U.S. territories and the motion picture industry.
 
Employers only have a little more than three months to get their FLSA houses in order. If an employer has exempt employees earning a salary of less than $684 per week (which is not all that uncommon in small businesses, retail establishments, restaurants, schools, and non-profits), it needs to determine whether to gross them up to the minimum salary threshold to maintain their exemption, or convert them to non-exempt hourly employees who are overtime eligible. If an employer does not know how many hours its potentially impacted employees
work on a week-to-week basis, there is no way to know whether to gross them up to maintain their exemption or convert them to non-exempt status. In other words, now is the best time to audit your wage and hour practices.
 
Employers cannot afford to sleep on this issue and take a chance of having improperly classified employees post-January 1, 2020. Wage and hour litigation continues to be one of the hottest areas for class action lawsuits and it is a significant potential liability for organizations of all sizes. The time to examine this issue and fix it is now, and it is quickly ticking away.
 
For more information about this significant change in wage and hour law, or to discuss an audit of your wage and hour, or other employment practices, contact Meyers Roman’s employment lawyers at 216-831-0042, or at the email addresses below:
 
Seth Briskin, sbriskin@meyersroman.com
Jon Hyman, jhyman@meyersroman.com
Lester Armstrong, larmstrong@meyersroman.com


Meyers, Roman, Friedberg & Lewis is a full-service law firm focused on addressing the legal needs of small and mid-size businesses, public

organizations and individuals. The firm's 30 attorneys provide counsel to local companies operating regionally, nationally and internationally.

DISCLAIMER
This Client Alert is a summary prepared for general informational purposes and is not intended or meant to constitute a legal opinion or legal advice from Meyers Roman Friedberg & Lewis or any of its attorneys. 

This Client Alert is not intended or written to be used, and cannot be used, by you or any other person to avoid any potential tax penalties that may be asserted by the Internal Revenue Service. To the extent this Client Alert mentions federal tax matters, it is not intended or
written, and cannot be used, for the purpose of avoiding federal tax penalties.  In addition, this Client Alert may not be used by anyone in promoting, marketing or recommending the transaction or matter addressed herein.







Which Website?

If you are a member of The Builders Exchange, Inc. and would like to access the member website, click "Member Login" below. If you:
  • Want to access your FREE Private Projects
  • Have received an ITB and wish to access a project to which you were invited FOR NO CHARGE
  • Want to search for project information(including plans, specs and addenda) that is available for purchase through our exclusive "Projects OnDemand" program
then click "Non-Member Login" below
Member Login Non-Member Login