The decision on what salary level is appropriate to be considered exempt is delayed

by Michael Haberman on October 23, 2018 · 0 comments


The USDOL has delayed the announcement of new salary levels for exempt employees.

Back in December of 2016 the Obama administration effort to raise the salary level which defined eligibility for exempt status from $23,660 to $47,476 per year, or $455 to $913 per week. That was brought to a halt in late November 2016 by several lawsuits, and as yet has not been decided. The USDOL has decided not to pursue the case, but there are some other groups that are trying to keep the case alive.

In the meantime

In the meantime, the US Department of Labor had not really expressed a stance on what the salary level was to be. SHRM had expressed an opinion (as I wrote here) that the DOL would make an announcement in October of 2018. The lawyers of BNA said they did not think any announcement would be made until early 2019. The DOL was traveling the country conducting listening sessions and they have now announced, according to attorney Allan Bloom of Proskauer Rose, that this announcement is now scheduled for March of 2019.

There is still an expectation that the new salary level will be between $33,000 and $35,000, but nothing official has been announced. What this means to employers is that anyone currently defined as being an exempt employee that makes less than that amount will either need to get a raise or will have to be reclassified as a nonexempt employee, thus making them eligible to earn overtime. It will also change the way they have to record their time, that is they will have to be much more accurate in how they document their time. It will also require many supervisors and managers to readjust how they manage those people.

Other changes

Apparently, this change may also redefine the basic rate of pay and the regular rate of pay, which are important in determining how much overtime is paid. That will be a new twist to this scenario. The announcement said:

The majority of 29 CFR part 778 was promulgated more than sixty years ago.  The [DOL] believes that changes in the 21st century workplace are not reflected in its current regulatory framework. While the [DOL] has periodically updated various sections of part 778 over the past several decades, they have not addressed the changes in compensation practices and relevant laws.  The [DOL] is interested in ensuring that its regulations provide appropriate guidance to employers offering these more modern forms of compensation and benefits regarding their inclusion in, or exclusion from, the regular rate.  Clarifying this issue will ensure that employers have the flexibility to provide such compensation and benefits to their employees, thereby providing employers more flexibility in the compensation and benefits packages they offer to employees.”

Other changes that will be announced include tipped wages and joint employer definitions.

We will have to wait and see. Stay tuned.


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