Happy New Year! Two New Wage Regulations to Start Your 2020
Ushering in 2020 means setting lofty resolutions to get more organized, be healthier, and comply with the U.S. Department of Labor’s (“DOL”) two new regulations that take effect this month.
New FLSA Minimum Salary Threshold Increase
If you have salaried employees earning less than $35,568 per year, regardless of their duties, those employees are likely no longer exempt. Effective January 1, 2020, the minimum salary threshold for the Fair Labor Standards Act (“FLSA”) white-collar exemptions increased to $684 per week or the equivalent of $35,568 per year. Additionally, the minimum salary threshold increased for “highly compensated employees” from $100,000 to $107,432 per year. However, employers are now allowed to use incentive payments—including commissions and certain non-discretionary annual bonuses—to account for up to 10% of the employee’s salary level.
As a refresher, the federal overtime provisions of the FLSA require that employers must provide overtime pay for hours worked over 40 in a workweek unless an overtime exemption applies. For an exemption to apply, an employee’s primary job duties and salary must meet certain minimum requirements. Since 2004, the minimum salary for the so-called “white-collar exemptions”—some of the most commonly used exemptions—has been $455 per week or the equivalent of $23,660 per year. In September 2019, the DOL released a final rule setting a new minimum salary threshold ($35,568) for the FLSA white-collar exemptions.
Calculating Your Employees’ Regular Rate of Pay
The DOL recently released a final rule—effective January 15, 2020—clarifying that certain perks and benefits may be excluded from the “regular rate” of pay calculation. The final rule should help employers that were confused about which perks or benefits may be excluded when calculating an employee’s regular rate of pay.
Under the FLSA, non-exempt employees must be paid at least 1.5 times their regular rate of pay for all hours worked over 40 in a workweek. The regular rate of pay includes “all remuneration” paid to the employee, with the exception of certain statutorily-excluded payments.
The DOL’s final rule confirms that the following perks, benefits and bonuses can be excluded from the regular rate of pay calculation:
Although the final rule helps clarify which employee-related costs may be excluded from the regular rate of pay, there remains significant liability for employers who miscalculate the regular rate of pay.
If you have any questions about this Alert, please contact a member of the Shulman Rogers Employment and Labor Law Group or the Shulman Rogers attorney with whom you regularly work.
The contents of this Alert are for informational purposes only and do not constitute legal advice. If you have any questions about this Alert, please contact the Shulman Rogers attorney with whom you regularly work or a member of the Shulman Rogers Employment and Labor Law Group.
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