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Salaried? Proposed New Salary Requirements May Affect You

Hand putting paper card in time recorder machine with clipping pathUnder the federal law, the Fair Labor Standards Act of 1938, employees paid a salary equal to or more than $23,660 annually ($455 or more per week) and who perform certain job duties are not entitled to overtime pay. If all goes as expected, that will soon change.  In March 2019, the U.S. Department of Labor proposed a new rule that would increase the salary amount to a minimum of $35,308 ($679 or more per week). The Department of Labor expects this change to impact nearly one million workers, entitling them to overtime pay.  Even highly-compensated employees would be impacted, and their bottom line would increase to $147,414 per year (from $100,000 annually) before exclusion from overtime pay.

Many may recall that back in 2016, the Department of Labor tried to raise the salary requirements to almost $50,000 annually, but those efforts ultimately stalled and never went into effect. The new proposed rule change is in direct response to those stalled efforts and will allow more employees to receive overtime pay.  Notably, the salary thresholds have not been increased since 2004.

Employers can deal with the proposed rule change in a number of ways.  Your employer could simply raise your salary to $35,308, which would mean an automatic increase in your wages.  On the other hand, employers could decide to cut hours or hire more employees to prevent having to pay overtime. Thus, keep a careful eye on changes in company policies, overtime rules and company restructuring in response to the new rule.  If adopted, the proposed rule will go into effect in early 2020.

As it stands, the Department of Labor submitted the proposed rule change for comments by the public and the comment period closes May 21, 2019.

Stay tuned to our blog for any developments on the proposed rule.

You can also check out the proposed rule at: https://www.dol.gov/whd/overtime/FAQ2019.htm


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