Salary Threshold Increase for 2020

Last week, the US Department of Labor announced an increase to the federal salary threshold for the “white-collar” exemptions from overtime pay. As of January 1, 2020, the weekly salary threshold increases from $455 to $684. If an employee does not meet the exemption requirements, they are eligible for overtime. As 2020 approaches, now is the time to review your exemption classifications and make changes, if necessary. 

To be classified as exempt from overtime under the Fair Labor Standard Act (FLSA), employees must earn over the salary threshold and meet the duties test. An employee that simply meets the salary requirement wouldn’t necessarily mean they are exempt from the FLSA overtime standards. They must perform work that is professional, executive, or administrative in nature.

While this increase does not impose changes to the duties tests, it is a reminder to employers the importance of an annual review of pay practices. California minimum wage has seen yearly increases that will continue until 2022. Exempt employees on the cusp of the salary requirement may require a yearly increase to continue to meet the salary threshold. 

Exemption status is complex and intricate. Contact a consultant if you have questions regarding this new salary threshold increase and if it applies to you.