DOL Issues New Salary Limits for Overtime Exemptions

OVERVIEW

On Sept. 24, 2019, the U.S. Department of Labor (DOL) announced a new final rule that updates the salary thresholds that some individuals must meet in order to qualify for a minimum wage and overtime exemption under the federal Fair Labor Standards Act (FLSA). The final rule becomes effective on Jan. 1, 2020.

The final rule affects the exemptions for executive, administrative and professional (EAP) employees, highly compensated employees (HCEs), employees in the motion picture industry and individuals who work in various U.S. territories.

Federal Salary Thresholds:

Current Levels

2016 Final Rule 2019 Proposed Rule 2020 Levels
Standard Salary Level  
(per week)

$455

$913 $679

$684

HCEs
(per year)

$100,000 $134,004 $147,414

$107,432

WHAT DOES THIS MEAN FOR NY EMPLOYERS?

Not much. New York State’s salary levels for so-called “white-collar” exemptions have exceeded the federal limits for several years. This means that employers within the state need to comply with the NY levels rather than the federal levels. Employers in New York City, Nassau, Suffolk and Westchester counties have different (higher), salary thresholds than the remainder of the state.

For employers outside of downstate, the current and planned salary thresholds for employees to qualify for an overtime exemption are as follows:

$832.00 per week on and after December 31, 2018;
$885.00 per week on and after December 31, 2019;
$937.50 per week on and after December 31, 2020.

Please click here to view additional information on the current and future salary levels for overtime exemptions in NY, along with answers to frequently asked questions.

 

ACTION STEPS

The federal rule’s Jan. 1, 2020 effective date leaves little time for employers to prepare for the changes. New York employers also have a new salary threshold to comply with as of Dec. 31, 2019. Please note that this ruling is not expected to run into any legal issues like the 2016 final ruling did, so we recommend that you do not wait to take action.

Employers should:

  • Determine which currently exempt employees have salaries below the new threshold; and
  • Decide whether to increase salaries for these individuals or reclassify them as non-exempt employees.

 

As always, please do not hesitate to contact us with any questions you may have.