Tag Archives: Highly Compensated Employees

Final Overtime Rule Threshold Set by DOL at $35,568

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On September 24th, 2019 the U.S. Department of Labor (“DOL”) announced its final overtime rule setting the minimum salary threshold for overtime eligibility at $35,568 ($684 per week) for white-collar exemptions. This is an increase from the current threshold of $23,660 ($455 per week) and slightly higher than the $35,308 proposed in March of 2019. The updated threshold is estimated to provide overtime eligibility to more than a million additional U.S. workers.

Other proposed changes from the announcement include:

  • The new salary level requirement can be met by using annual or more frequent nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the salary level test.
  • The exemption threshold for Highly Compensated Employees (HCE) will be set at $107,432, which is lower than the initial proposal of $147,414 but up from the current level of $100,000. HCE remain eligible for an exempt status if they are paid over the new amount and meet a reduced duties test. The reduced duties test includes:
    • The employee’s primary duty must be office or non-manual work, and
    • The employee must regularly perform at least one of the bona fide exempt duties of an executive, administrative or professional employee.
  • No changes to the duties requirements, which are evaluated in determining the exemption status of an employee.  This means a job reclassification, if any, will be based only on changes to the threshold amount.
  • The DOL has not set a time frame for automatic increases, as proposed in 2016, but commits to conducting periodic reviews to keep the thresholds in line with future wage rates and inflation.

Employers have 3 months to comply with the changes as the ruling takes effect on January 1, 2020. As a reminder, the Fair Labor Standards Act does not preempt stricter state standards.

Questions? Please contact the Findley consultant you regularly work with, Jen Givens at Jen.Givens@findley.com, 216-875-1944, or Brad Smith at Brad.Smith@findley.com, 419-327-4414.

Published September 26, 2019

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DOL Proposes $35K as New Overtime Rule Threshold

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A long-awaited announcement was made yesterday from the US Department of Labor (DOL). It published a proposal raising the salary level requirements to $35,308 per year ($679 per week) for white collar exemptions. The proposed threshold, up from the current $23,660 ($455 per week), is estimated to provide overtime eligibility to more than a million additional US workers if passed.

Other proposed changes from the announcement include:

  • The new salary level requirement can be met by using annual or more frequent nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the salary level test. This is a change from the 2016 proposal which required nondiscretionary bonuses to be paid at least quarterly to be included.
  • The proposed Highly Compensated Employees (HCE) threshold is $147,414, up from the current level of $100,000. The Obama administration proposed $134,004 in 2016. 
  • No changes to the duties requirements – meaning job reclassification, if any, will be based only on salary.
  • No automatic increases, as proposed in 2016, however, the DOL is proposing a required review every four years to ensure the threshold keeps up with inflation.

As a reminder, the Fair Labor Standards Act does not preempt stricter state standards. The public has 60 days to respond to the announcement. A final ruling is expected by January 2020.

We will continue to inform you of any advances in the proposed overtime rules as they become available.

Questions? Please contact the Findley consultant you regularly work with, Jen Givens at Jen.Givens@findley.com, 216-875-1944.

Posted on March 8, 2019

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