Department of Labor Issues Final Ruling on Changes to Salary Threshold

CORRECTION TO MAB NEWSLETTER ARTICLE ON NEW FLSA RULES

In the Friday, October 4, MAB newsletter, an IRS category of employee was incorrectly identified. The correct term denoting individuals in supervisory/management capacities are considered white-collar employees. It is this category of employee which has had the pay scale limit raised. According to an IRS Bulletin on September 24, 2019 new rule increases the number of workers eligible for overtime pay by 1.3 million.

We have confirmed with our attorneys that there is no change to the creative exemption under which we categorize journalist, on-air personalities and graphic artists, to name a few. Please check with your own attorney for details and exemptions.

We apologize for the error.

Karole L. White
MAB President/CEO

Full corrected article:

The Department of Labor (DOL) issued its final ruling regarding changes to the salary threshold for exempt white-collar employees on September 24, 2019 according to a recent article from Varnum Attorneys at Law. The rule changes the minimum salary that white-collar employees must be paid to qualify as exempt from the overtime requirements under the Fair Labor Standards Act (FLSA). The final rule takes effect on January 1, 2020 and raises the current minimum salary level of exempt employees from $455 per week or $23,660 annually, to $684 per week, or $35,568 annually. This change is less than the one proposed in 2016 which would have raised the minimum salary level for much higher but it never took effect.

Under the current DOL regulations, most white-collar employees – executives supervisors, administrative employees and professionals are exempt from the FLSA rules and do NOT need to be paid overtime for workweeks in which they work more than 40 hours if they satisfy the following two conditions: 1) They must perform what the DOL has defined as exempt duties and, 2) They must receive a guaranteed salary of at least $455 per week or approximately $23,660 annually. The final rule just announced by DOL only changes the minimum salary requirement.

Key features of the final FLSA rule are:

  • Raises the salary threshold necessary for a white-collar employee to qualify as exempt.
  • Does not change the duties tests, which also must be met for white-collar employees to qualify as exempt provides that up to 10% of the standard salary level may come from non-discretionary bonuses and incentive payments (including commissions) that are paid at least annually.
  • It sets forth no automatic updates to the salary thresholds.

In that this ruling takes place January 1, 2020, you should discuss this new DOL rule with your attorney to determine what, if any, changes you may have to make to comply with the revised rule.

After a brief review of this new rule it doesn’t look like any of the tests for the creative professional exemption have changed. Journalists and on-air personalities may fall under this exemption. Watch the MAB newsletter for further updates as we review continue to look at these new rules. Click here to view the Creative Job Exemption.