U.S. Department of Labor Raises Salary Limit for “White Collar” Exemption starting January 1, 2020

The Fair Labor Standards Act requires covered employers to pay employees a minimum wage and, for employees who work more than 40 hours in a week, overtime premium pay of at least 1.5 times the regular rate of pay.  Under the so called “white collar” or “EAP” exemption, these minimum wage and overtime pay requirements do not apply “any employee employed in a bona fide executive, administrative, or professional capacity.”

The DOL has raised the salary level to qualify for the “white collar” salary exemption from $455 per week or $23,660 annually, to $684 per week, or $35,568 annually.  For example, under the old law, employees that earned $24,000 per year would not have to be paid overtime.  Under the new ruling, this exemption could be claimed only for “white collar” employees earning more than $35,568.  Over all the new rule:

  • Raises the salary threshold necessary for a white-collar employee to qualify as exempt.
  • Does not change the duties tests, which also must be met for white-collar employees to qualify as exempt and provides that up to 10% of the standard salary level may come from non-discretionary bonuses and incentive payments (including commissions) that are paid at least annually.
  • It sets forth no automatic updates to the salary thresholds.

Importantly, this new regulation does not change the “creative” exemption.  The tests for the creative professional exemption remain the same. Journalists and on-air personalities fall under this exemption. A description of the “creative job exemption may be found HERE.

Labor law is complicated. We suggest you contact your counsel to review the rules before they go into effect on January 1st.

To see a copy of the new regulations click HERE.

 

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