It has finally happened! The USDOL has announced that it is setting the new exempt salary threshold for the “white collar” exemptions at about $35,000, about $700 per week. The exact salary is $35,368 annually. This is far lower than the Obama-proposed $47,000 per annum, almost $900 per week. The new salary level takes take effect on January 1, 2020.
The acting Secretary of Labor noted that “for the first time in over 15 years, America’s workers will have an update to overtime regulations that will put overtime pay into the pockets of more than a million working Americans.” The agency decided on the new level in March 2019 and just finalized the new rule, with few changes from that proposed in the spring.
The Highly Compensated Exemption (HCE) threshold rose from $100,000 to $107,432. The Obama proposal would have set this level at approximately $147,000. This exemption applies to well-paid workers who perform a single exempt duty. On another note, and this is very important, there is no escalator provision in the rule.
The agency believes that approximately 1.3 million workers will now become overtime eligible. There was, however, political backlash, as Congressman Bobby Scott, D-Va., Chairman of the House Committee on Education and Labor, asserts that many millions will not receive the overtime that they should. He stated that “the Obama administration’s rule, which was a modest but significant effort to restore overtime protections, would have covered a third of salaried workers. The Trump overtime rule will cover less than 15 percent of these workers.” He also lamented the failure to provide for a mechanism for automatic increases to the base salary for exempt status.
I may be a voice crying out in the wilderness, but I don’t think this is such a big deal. My experience with my clients is that the vast majority of them, of employers, are already paying $700 per week to workers they deem exempt, even first level supervisors.
Much ado about nothing?