It is hard to forget the scrambling that occurred at the end of 2016 to prepare for the anticipated minimum salary increase for salaried-exempt white collar workers from $23,660 to $47,476. The new ruling was scheduled to go into effect on December 1, 2016 but was struck down days before the deadline. Those who were watching the courts closely knew they needed a plan to prepare should the ruling hold, but they waited before making a move. Those who were not, may have adjusted their salary minimums to only learn that the rule was struck down. This decision could have been very costly, or worse yet, the employer may have taken the salary increase away; potentially harming employee relations.
Fast forward to March 7, 2019- The “Department of Labor announced a proposed rule that would make more than a million more American workers eligible for overtime” (DOL.gov). The overtime regulations have been under review by Secretary Acosta and his team and they finally released the proposed salary minimum from the Department of Labor.
The newly proposed salary minimum for most exempt employees is $35,308. That is actually a bit higher than expected, but much lower than 2016. Currently, most employees you consider exempt from overtime must be paid more than $23,660 annually. Should the proposed new minimum go into effect, exempt employees must make more than $35,308 annually or their status must be adjusted to an hourly non-exempt position. Employers may use bonuses or commission to satisfy up to 10% of the new minimum level. Overtime protections remain unchanged for police officers, firefighters, nurses, laborers and construction workers, to name a few (DOL.gov).
Additionally, this new proposed rule making increases the total annual amount for highly compensated employees from $100,000 to $147,414.
What happens now?
There is a mandatory 60-day public comment period, after which the final regulations will go into effect. It is unclear exactly when/if this new rule will go into effect, although we have heard late fall or early 2020.
Here are 4 steps employers should consider:
- Audit your exempt classifications.
Ensure that the employees currently receiving an exempt salary are truly exempt.
Review employees that are earning an exempt salary in the range of $23,660 and $35,308 to determine how you want them paid in the future.
Develop an action plan and implement it once the rule goes into effect. Remember do not act too quickly as this is simply a proposed rule at this time!
Should you need more clarification regarding this or any other HR matter, contact Sage Solutions Group at 734-855-7187 or visit us on the web at www.sagesolutionsgroup.com. Sage offers a free HR audit to assess your current HR health, call now to schedule!