Today, the U.S. Department of Labor has unveiled arguably the most employer-anticipated action taken during the Trump administration: the final rule raises the salary threshold for the Fair Labor Standards Act's "white collar" exemptions to $35,568 per year ($684 per week), effective January 1, 2020. It is expected to be published in the Federal Register tomorrow.
So...
- Time to start planning and setting a timeline for compliance!
- With the prior salary level being $23,660, there are likely to be nearly one million currently exempt employees earning a salary between $23,660 and the new threshold.
- Evaluate those folks and whether to reclassify or raise salary amounts—please, please don't forget to consider the implications of your decision internally on your current exempt and non-exempt workers.
- The new salary threshold is almost $12,000 less than the Obama proposed threshold of $47,476.
- It's the first increase in 15 years (since 2004 in the Bush administration).
- The highly compensated employee salary threshold will now go from $100,000 to $107,432 (which is significantly less than the Obama administration's proposal). Note: some states do not recognize this exemption, like the wonderful Commonwealth of Pennsylvania.
- There is no automatic increase mechanism—so this is the threshold until the DOL decides to change it (or it is overturned via what is expected to be several lawsuits filed by worker advocate groups).
More to come as the new final rule is analyzed. Stay tuned!
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