DOL Updates Salary Threshold for Exempt Employees

The Department of Labor unveiled its final rule updating the salary threshold for so-called “white collar” exempt employees. The final rule, effective January 1, 2020, raises the salary threshold to qualify for one of the “EAP” exemptions to $35,568 per year or $684 per week.

The current threshold is $23,660 per year. The Obama administration had proposed a $47,476 cutoff, which was struck down in a court challenge.

Recall that the EAP exemptions are the executive, administrative, and professional exemptions to the overtime provisions of the Fair Labor Standards Act (FLSA). Employees must meet the duties of one or more of the EAP exemptions–plus be paid at least the weekly salary threshold.

Employers with exempt workers making less than $684 per week (or $35,568 per year) should evaluate whether to reclassify the workers as non-exempt, and pay them overtime for hours worked over 40 in a workweek, or raise their salaries.

Notably, the new rule raises the “highly compensated” worker threshold from $100,000 to $147,414. This exemption covers highly compensated workers who perform some managerial duties, but has a less strict duties test.