On Sept. 24, 2019, the U.S. Department of Labor (“DOL”) announced its final rule regarding changes to the salary thresholds for employee exemptions from the overtime requirements of the Fair Labor Standards Act (“FLSA”). DOL estimates that these changes will make 1.3 million American workers newly eligible for overtime pay.
DOL’s final rule increases the salary threshold for the so-called “white-collar exemptions” (administrative, executive, and professional employees) from $455 per week ($23,660 annually) to $684 per week ($35,568 annually). While this increase is less than the previous 2016 proposal to double the salary threshold to $47,476 annually, it is still a substantial increase of nearly 50%. Certain non-discretionary bonuses, incentive payments, and commissions, paid at least on an annual basis, may be used to satisfy up to 10% of the new salary threshold. The new rule does not change the duties tests, which also must be met for a white-collar employee to qualify as exempt.
The final rule also raises the salary threshold for the “highly compensated employee” exemption from $100,000 to $107,432 annually (at least $684 of which must be paid weekly on a salary basis). The final rule becomes effective on Jan. 1, 2020, and DOL estimates that 1.3 million additional U.S. workers will then become eligible for overtime. DOL also calculated that workers will receive an additional $298.8 million in overtime pay each year as a result of the revised rule.
School districts should review employee positions that are classified as exempt to determine whether any changes are necessary to comply with the new FLSA requirements. Teachers are exempt from the FLSA if their primary duty is teaching or tutoring and they are engaged in this activity as a teacher in an educational establishment (Fact Sheet #17D). More detailed information on the new salary threshold rule can be found here.