Today, we have a guest post from Christine Frazer with HR Any Day.
After years of back and forth, the Department of Labor has finalized the new exempt threshold with an effective date of January 1, 2020.
Some highlights regarding the final rule:
- It raises the standard or minimum salary level from $455 to $684 per week (the equivalent of a raise from $23,660 to $35,568 per year for a full-year worker). This means an estimated 1.3 million American workers will become eligible for overtime pay, if not given a raise above the new minimum;
- It allows employers to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level;
- It raises the total annual compensation requirement for “highly compensated employees” from the current level of $100,000 per year to $107,432 per year, which matters most in states that (unlike Oregon) actually recognize that exemption
Great, so what does it mean?
If you have an employee currently classified as exempt (salaried) making less than $35,568 per year, you have some work to do. Please note, it’s not enough to simply raise their salary to the new minimum of $35,568 and call it good. This is the time to ensure they are truly an exempt employee. Do they meet the Department of Labor’s exempt duties test? If you aren’t sure, click on the following link: https://www.dol.gov/whd/overtime/fs17a_overview.htm
The classification of an exempt employee is not the choice of the employee or the employer, but rather, governed by the work the employee does. Make sure you understand the work the employee is doing and then match it up to the duties test. If the work requires independent thought and decision making, ability to hire and fire, supervises two or more people and has impact on company policy development, then you are more likely to find that you have an exempt position. If that’s the case, their salary must be raised to the minimum threshold of $35,568 by January 1, 2020.
If you realize the position is not exempt, the position must now be paid an hourly rate and is eligible for overtime under the law by January 1, 2020.
Finally, a reminder: please don’t forget that September 29, 2019 is an important day in Oregon. That’s when HB 2593 becomes effective, calling on every employer to provide nursing mothers with a reasonable (generally unpaid) rest period to express milk (and the break must be provided each time the employee has a need to express milk). September 29, 2019, is also when “Part 1” of the Workplace Fairness Act (or “WFA,” SB 726) becomes effective, with a new, five-year statute of limitations for most harassment/discrimination claims. (WFA’s new policy requirements and its new restrictions and requirements on confidentiality or nondisparagement provisions become effective October 2020.)
Please feel free to reach out with any question, or if you’d like to discuss the impact this may have on your organization at firstname.lastname@example.org or 541-233-7815.