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Employee Salary: Try To Keep Up

DOL proposes new minimum salary for exempt employees

Minimum salary rates may soon be on the rise after the U.S. Department of Labor (DOL) announced new proposed regulations that would increase the minimum salary for employees to qualify for the executive, administrative and professional exemptions.

Under the Fair Labor Standards Act, the proposed wage change would increase to $679 per week, or $35,308 per year. This is up from $455 per week, or $23,660 per year, which was established in 2004. It is, however, significantly less than the $913 per week, or $47,476 per year, minimum that was proposed in 2016, and later blocked by a federal court in Texas.

The new proposed rules do not include provisions for automatic increases in the minimum salary. Instead, the DOL anticipates reviewing the minimum salary threshold every four years.

Another new consideration in the proposed rules would allow employers to use non-discretionary bonuses and commissions paid at least annually to meet 10 percent of the minimum salary obligation.

Listen to episode 166, “Become A Payroll Perfectionist,” on unsuitable on Rea Radio, Rea & Associates’ award-winning podcast, featuring Dee Gray, CPP.

Things To Remember

As before, employers should be aware that simply paying the new minimum salary is not enough for an employee to qualify as exempt. The proposed rule did not affect the “duties tests.” In order to qualify for exemption, employees must still perform as the “primary duty,” duties identified as exempt under the executive, administrative and professional exemptions. Additionally, the proposed rule did not change the mechanics of the salary basis test.

The DOL will accept public comments on the new rules for a period of 60 days after the Notice of Proposed Rulemaking is formally published in the Federal Register. The timing of a final rules remains uncertain, but it’s likely the DOL will work to have final rules in place before the 2020 election.

What Should You Do Now?

There is no need to panic. Even if you have employees whose salaries fall below the new proposed minimum, it will be some time before we know what the final rules will look like, or if they will even survive the legal challenges that will inevitably follow. To ensure that you’re prepared, feel free to reach out to myself or your primary Rea contact to evaluate your current situation and determine what, if any, changes might need to be made.

By Dee Gray, CPP (New Philadelphia, Ohio)

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