The Department of Labor has announced a Proposed Rulemaking that would adjust the FLSA minimum salary requirement for exempt level staff.

Under the current law, employees with weekly pay of less than $455 ($23,660 annually) must be classified as non-exempt and are subject to overtime pay for all hours worked over 40 per work week.  The proposed new rule will increase that weekly pay to $679 ($35,308 annually).

The proposed rule also has the following recommended changes.

  • Up to 10% of nondiscretionary bonuses and incentive payments (including commissions) paid on an annual or more frequent basis may be used towards the salary threshold requirement.
  • Highly compensated employees must earn a total annual compensation of at least $147,414 ($679 of which must be paid weekly on a salary or fee basis).
  • There is no automatic update to the salary threshold (as was recommended in the 2016 proposed rule). The Department of Labor intends to propose an update to the salary threshold every four years to ensure that these levels continue to provide useful tests for exemption.

The public comment period closed on May 21, 2019; a finalized rule should be announced in the next few months.  The proposed implementation date of the new rule is January 1, 2020.

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