By Chase M. Patterson
On September 24, 2019, the U.S. Department of Labor announced a final rule establishing a higher minimum salary threshold for exempt white collared employees. As a quick refresher, the Fair Labor Standards Act (“FLSA”) requires employers to pay overtime to an employee who works more than forty (40) hours in a workweek unless the employee is exempt from the overtime regulations. Under the old rule, to be exempt, an employer had to show that the employee: (1) was paid on a salary basis at least $23,660 annually; and (2) performed certain professional, executive, or administrative duties. The new U.S. Department of Labor rule, which is set to take effect January 1, 2020, increases the minimum salary threshold from $23,660 annually to $35,568 annually. More information relating to the U.S. Department of Labor announcement can be found at the following link: https://www.dol.gov/whd/overtime2019/
Employers will need to review their policies and payroll practices to confirm compliance with the U.S. Department of Labor’s new rule. Certain employees who were previously categorized as exempt may no longer be able to meet requirements under the U.S. Department of Labor’s new rule. Under such scenario, employers will need to take steps to either increase the employee’s pay to the new threshold level or reclassify the employee as non-exempt or else risk potential penalties and/or liability under the FLSA.
Mr. Patterson concentrates his practice on labor and employment law and business and corporate law. He joined DeFur Voran LLP in November 2016 and serves clients in the Indianapolis area, Muncie, and Lafayette.