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Department of Labor Releases Proposed Regulation Increasing Salary Threshold

March 26, 2019lisaLegal News

On March 7, 2019 the U.S. Department of Labor announced a Notice of Proposed Rulemaking that could increase the minimum salary level for overtime-exempt employees. Currently, employees with an annual salary below $23,660 must be paid overtime if they work more than 40 hours per week. The new rule would increase that minimum amount to $35,308 per year. More information is available at www.dol.gov/whd/overtime2019.

Remember, however, that salary amount is only one component in determining whether an employee is exempt from the overtime requirement. To be exempt, an employee must also generally perform duties properly classified as executive, professional, or administrative.

Although the proposed rule is in its preliminary stages, employers should take note of the effect the rule could have on employees.  In assessing its effect, employers should identify any employees who are classified as exempt and consider increasing salaries of those executive, administrative, and professional employees who may become eligible for overtime once the new rule takes effect.  The costs of increasing some salaries may be less expensive than incurring the overtime costs.  Similarly, should the salary level rise and make most of your team non-exempt, consider hiring more employees to spread the work around and avoid having fewer employees put in overtime hours.

By: Mike Cavosie & Betsy Huffman