DOL Raises Minimum Salary Threshold Requirement for Overtime and Minimum Wage Exemptions

The United States Department of Labor recently announced that it will raise the salary threshold workers must be paid in order to qualify for certain exemptions from overtime and minimum wage requirements under the Fair Labor Standards Act (FLSA). As of January 1, 2020, the minimum salary requirement will be raised from $455/week to $684/week. That’s an increase of approximately $12,000 annually, making the new annual salary threshold $35,568. This amount is approximately $12,000 less than the increase proposed by President Obama in 2014. Massachusetts law follows federal law in this regard, meaning that this new amount will also be applied to exemptions. under the Massachusetts Wage Act.

This change will have a dramatic impact on whether employees must be paid overtime. For the most part, this change means that employees paid a salary of less than $35,568/year will have to be paid overtime for hours worked over 40 in a workweek, regardless of their job title and job duties.

Don’t panic. The law won’t take effect until January 2020, but you should start giving thought now in terms of preparation. Some ideas in that regard are:

  • Increasing base salaries for exempt employees who are paid less than $35,568 in order to preserve the exemption;

  • Hiring employees to avoid the number of overtime hours worked by exempt employees; and

  • Reclassifying exempt employees that make less than $35,568 per year as non-exempt.

Do you have questions about how this salary threshold change will impact you? Contact us today.