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Get Ready! Increased Salary Basis Effective Jan. 1, 2020

Today's guest blog comes from Mimi Soule, Managing Partner | Management Advisor of Soule Employment - Law Firm.

The DOL recently issued its final ruling on new changes to certain white collar exemptions. As many of you are aware, generally, all employees are non-exempt and eligible for minimum wage and overtime pay unless their position can be classified as “exempt” under federal law and applicable state law where the employee is performing services. The DOL has just updated some of the federal exemptions – primarily impacting employees who may be classified under the executive, administrative, professional and highly-compensated employee exemptions.

What does the new rule change?

  • It increases the salary basis from $455.00 per week to $684.00 per week (or $35,568 per year);

  • For highly compensated employees, the current required compensation increases from $100,000 per year to $107,432 per year;

  • It confirms a commitment to periodically review the salary threshold;

  • It allows employers to use non-discretionary bonuses and incentive payments (including commissions) paid annually (or more frequently) to satisfy up to 10% of the salary basis;

  • It revises the special salary levels for workers in U.S. territories and the motion picture industry; and

  • It confirms that there are no changes to the required duties tests for the impacted exemptions.

When do the changes take effect?

The DOL rule takes effect on January 1, 2020.

What is your homework?

  • First, we would suggest that you start by analyzing whether your employees are properly classified as “exempt” employees under the impacted exemptions and currently meet the duties requirements of the applicable exemption(s). Note that classifying an employee as “exempt” is a legal test and may require reviewing DOL opinion letters and court decisions to confirm proper classification.

  • Second, conduct a cost analysis of the potential increase in wages required by the new rule.

  • Third, work with your legal team to discuss any employment changes and strategies to reduce possible cost.

This may seem like deja vu for many employers after a similar rule change threatened to take effect in 2016. For a brief history lesson, check out our previous blog article HERE.

For more information, please see the DOL’s fact sheet on this new rule or contact the Firm with any questions.

Mimi left traditional employment litigation practice and established Soule Employment Law Firm to focus on providing business owners and managers with practical advice to help avoid costly litigation. She now focuses her practice on providing employment law and human resources compliance advice, preparing employment-related contracts, and defending employers against administrative claims.

As a business owner herself, Mimi understands the importance of budgeting expenses – especially legal costs. Accordingly, the Firm offers the majority of its legal services on a fixed-fee or project-fee basis.

Mimi Soule

Managing Partner|Management Advisor Soule Employment - Law Firm

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