On September 24, 2019, the U.S. Department of Labor ("DOL") revised the salary threshold for the Fair Labor Standards Act ("FLSA") exemptions. The change could cause millions of Americans to be reclassified as non-exempt.
The FLSA requires employers to pay overtime wages for all time worked in excess of 40 hours per week. However, certain positions can be classified as “exempt,” allowing employers to disregard the overtime requirement. The exemptions are available for executive, administrative, and professional employees. To qualify, the employee must perform specific duties and be paid on a salary basis that meets a minimum salary level. Pursuant to the DOL’s new rule, the salary level was raised from $455 per week to $684 per week, the equivalent increase of going from $23,660 to $35,568 per year for a full-time employee. 

The DOL also raised the salary level for the “highly compensated employee” exemption, under which an employee who performs at least one of the duties under the administrative, executive, or professional exemptions and receives a minimum salary can be classified as exempt. The salary threshold for the “highly compensated employee” was increased from $100,000 to $107,432 per year. 

Accordingly to the DOL, the new rule will cause 1.3 million workers to be reclassified as non-exempt, meaning that they will now be entitled to overtime pay. Employers should examine their current classifications to ensure that they remain compliant under the new salary thresholds.