Starting January 1, 2020, the minimum salary for exempt employees under the Federal Labor Standards Act (“FLSA”) increased to $684 per week or $35,568 per year, pursuant to the Final Rule of the U.S. Department of Labor. Pursuant to the rule, executive, administrative, and professional employees must be paid a salary of at least the minimum salary threshold to remain exempt under the FLSA. The previous threshold was $455 per week or $23,660 per year.
The Department of Labor’s Final Rule also:
- Increased the total annual compensation level for a “highly compensated employee” from $100,000 to $107,432 per year; and
- Allows companies to use nondiscretionary bonuses, incentive payments and commissions to satisfy up to 10 percent of the standard salary level.
The current increase is a compromise from the Obama administration’s proposal to increase the threshold to $47,000 in 2014 (to be effective in 2016). In 2017, a federal judge in Texas invalidated the change, finding that the Department of Labor had exceeded its authority.
To comply with the new rule employers can either increase the salary of previously exempt employees earning less than the minimum or convert salaried employees to hourly. Employers should also take this opportunity to revisit job descriptions to ensure that they also meet the duties requirements under the various federal exemptions. If you have questions about compliance with federal or Minnesota state wage and hour requirements, contact the employment law attorneys at Trepanier MacGillis Battina, P.A.
Anna M. Koch is a Minnesota employment law attorney. She can be reached at 612.455.0991 or at email@example.com.