After almost a year of discussion, and more than 270,000 comments, the Department of Labor just issued new salary thresholds for exempt and highly compensated employees.
The current salary threshold ($23,660) was last set in 2004. Finding that amount was not within the 40th percentile of salaried workers, the Department will require exempt employees to be paid a minimum of $913 per week, or $47,476 per year. In order to meet the "highly compensated" exemption, workers must be paid at least $134,004 rather than $100,000.
To maintain the level of salaried workers at 40%, the minimum salary threshold will be readjusted every four years based on the census. The next adjustment is expected in January 2020.
What Does This Mean For Employers?
By December 1, 2016*, employers must:
- Adjust the base salaries of exempt employees to conform with the new minimum. The Department has said that up to 10% of the salary can be non-discretionary commission/bonus; OR
- Move exempt employees to non-exempt status and carefully monitor overtime; AND
- Move workers who are exempt based on the highly compensated worker exemption to a minimum salary of $134,000.
*The effective date of the Rule, assuming Congressional efforts to derail its implementation are unsuccessful.
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