One of the most important wage and hour regulatory initiatives of the U.S. Department of Labor (DOL) has been updating the Fair Labor Standards Act's (FLSA) "white collar" overtime exemptions. And on Sept. 24, the DOL published the final version of the much-anticipated FLSA rule. The final rule increases the salary threshold workers need to meet in order to qualify for the executive, administrative and professional exemptions from the current $23,660 per year to $35,568 per year (or from $455 per week to $684 per week). The final rule also permits employers to count nondiscretionary bonuses, incentives and commissions as up to 10% of an employee's salary level as long as those payments are paid annually. In addition, the FLSA's exemption threshold for highly compensated employees will be increased from the current threshold of $100,000 to $107,432.
The rule will take effect on Jan. 1, 2020, and will replace the controversial 2016 rule that was blocked by a federal judge in Texas before it could take effect. Jan. 1 will be here before we know it, so employers should review their exempt employees and ensure that they will meet the new thresholds for exempt status.
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