In the latest Weekly Wright Report:
DOL Issues New Overtime Rule Effective January 1, 2020
by Greg Currey
On September 24, 2019, the Department of Labor announced its final rulemaking officially increasing the minimum salary requirements for exempt employees under the Fair Labor Standards Act. Effective January 1, 2020, exempt employees must be paid a minimum salary of $684 per week (equivalent to $35,568 per year for a full-year worker) in order to be exempt from the overtime requirements of the FLSA, in addition to meeting the duties requirements of the exemptions. This rulemaking also formally rescinds the DOL’s regulations from 2016 which would have increased the minimum salary threshold to $47,476 per year before they were blocked by the Fifth Circuit. According to the DOL’s estimates, the new rulemaking would allow approximately 1.3 million workers to become eligible for overtime unless their salaries are increased.
In addition to raising the standard salary level, the new rulemaking also raises the total annual compensation level for “highly compensated employees (HCEs)” from the currently-enforced level of $100,000 to $107,432 per year. This is approximately $40,000 less than the proposed rulemaking from March, 2019. Highly-compensated employees are subject to a less stringent duties test, which makes the reduction significant. The new rulemaking also follows the 2016 rule in allowing employers to use nondiscretionary bonuses and incentive payments (including commissions) that are paid at least annually to satisfy up to 10 percent of the standard salary level, in recognition of evolving pay practices.
Employers should immediately begin auditing their compensation levels to determine how to adjust to the new salary threshold. Simply raising salaries is not necessarily the only way to react and employers should begin planning for January 1 now. For some employees making just a little less than the new salary requirement, the most effective plan may be to provide salary increases. For other employees, an employer may want to transition them from an exempt status to a non-exempt status and hire more employees to reduce the number of overtime hours that employees are working.
In 2016, my colleagues and I worked with many employers to prepare for the change to the salary thresholds. We learned that there is no one-size-fits-all strategy but, with the right plan and preparation, this change can be managed effectively. If you have questions about how your organization should prepare for the changes to the salary thresholds, please do not hesitate to contact me or any of the other attorneys in our labor and employment practice.
In early November, Wright, Constable & Skeen will be hosting a seminar explaining the new rules and discussing the duties tests for exempt employees to help employers prepare for the rule change. A formal announcement with registration will follow but, if you have any questions about the seminar or would like to pre-register, please contact Julie Dellinger at firstname.lastname@example.org.
“They/Them/Theirs or Ze/Hir”
Some transgender and gender-nonconforming individuals are not comfortable with traditional pronouns, like she/her/hers or he/him/his. The preference is they/them/theirs or ze/hir. This choice goes to the core of their identity. Colleges have begun to recognize this and ask new students what their choice of pronoun is during orientation so that all students can comfortably address this on day one. Students are not left to deal with it on their own at a later date.
Sometimes workplaces are slower to adopt politically correct behaviors. By now, hopefully managers know not to inquire about a candidate’s or an employee’s race, religion, or make sexual comments, etc. that violate an employee’s civil rights. But employers may be less aware of discussing gender identity issues and could assume that off-handed comments are not harmful. But beware, degrading remarks about transgender and nonbinary people, even on the use of preferred pronouns may lead to a claim of discrimination.
This pronoun issue is not a trend. These folks are not seeking attention and they’re not radicals. It’s our duty as business owners, managers and colleagues to learn and get comfortable with the use of preferred pronouns to ensure that all of our employees feel welcome in the workplace.
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