Department of Labor Proposes New Overtime Rule Raising the White Collar and Highly-Compensated Employee Exemption Thresholds

March 13, 2019

 

On March 7, 2019, the U.S. Department of Labor issued a proposed rule that will raise the Fair Labor Standards Act’s white collar and highly-compensated employee exemption thresholds for the first time in fifteen years. Specifically, the rule seeks to increase the minimum salary required for workers to qualify for the “white collar” exemptions from $23,660 per year (or $455 per week) to $35,308 (or $679 per week) per year, as well as raising the overtime eligibility threshold for highly-compensated employees from $100,000 to $147,414 per year.  Some highly compensated exempt employees may qualify for other overtime exemptions notwithstanding the new salary threshold, but proper analysis should be performed by employers before automatically designating such employees exempt. The rule also allows employers to count various nondiscretionary bonuses and incentive payments towards the salary threshold for up to ten percent of a worker’s salary.  The DOL expects the new rule to go into effect in January 2020.  This change would have no effect on individual state salary requirements, and employers are advised to consult their local state regulations for compliance.

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