As always, at the end of each year it is important to take a look at what the upcoming year will hold with regards to changes to employment and labor law, particularly those that will directly affect your organization and your employees. In 2020, there are a number of state and federal changes that will be taking place that the many employers will be impacted by.
The biggest change that will hit employers in virtually any industry or location, and will apply regardless of the size of the organization, is the long-awaited update to the federal exempt salary threshold for exempt employees. After years of debate on the topic, the Department of Labor released their final ruling on September 24, 2019, announcing an increase to the salary-level thresholds for white-collar exemptions.
Here are some things you need to know about this change:
- Takes effect on January 1, 2020.
- The salary threshold for professional, administrative, and executive exempts will raise from $455 per week ($23,660 annually) to $684 per week ($35,568 annually).
- Also applies to those who fall under the “computer employee” exemption.
- The DOL has elected to permit employers to use incentive bonuses, commissions, and non-discretionary bonuses to satisfy up to 10% of the salary threshold for these exemptions.
- The threshold for highly compensated employees has been raised from $100,000 to $107,432 annually.
- The duties test has remained the same from the requirements in recent years.
Employers are strongly encouraged to review the FLSA classifications of their employees prior to the end of the year and should be prepared to make any necessary changes to job descriptions, exempt classifications, and salaries as needed to ensure compliance with the new ruling.
HRCentral will contact our affected clients and colleagues to assist with any changes necessary for a smooth transition, in addition to discussing changes related to any state-specific updates that will hit at the start of the new year (e.g., changes to family and medical leaves, independent contractor statuses, and minimum wage increases).
Contact HRCentral today if you have any questions regarding this new rule, or if you need any assistance updating your policies or procedures accordingly for compliance, by email at firstname.lastname@example.org or by phone at 800.574.3282.
Are you ready for the December 1, 2016 deadline? After two years of debates and evaluations of comments, a final rule was implemented on May 18, 2016 the final rule was published (DOL Final Rule) with an effective date of December 1, 2016. The primary effect of this rule on employers is that exempt employee’s minimum standard has more than doubled. Exempt employee’s minimum salary will now be set at $ 913 per week ($47,476 annually). The minimum standard is also set to be adjusted every three years with the next adjustment beginning January 1, 2020.
In 2014 President Obama instructed the Department of Labor (DOL) to evaluate and propose a new rule that would address the deficiencies in the existing laws. These deficiencies were some industries paying managers and team leads the minimum salary of $ 455 per week ($ 23,660 annually and then those companies expected those employees to regularly work more than 40 hours a week. This of course led to some situations where managers were being paid less than the employees they supervised.
What does this mean for your business? First, you need to ensure that all of your exempt employees meet the new minimum standard. A simple report from payroll/HR can give you an idea if you already comply with the new regulation.
If you do have exempt employee’s that are below the minimum threshold, you will need to decide whether to increase their salary or move that employee to hourly. In the event, you need to move the employee to hourly, make sure that you meet with the affected employee and explain the reasoning behind the change. Additionally, you will also want to ensure that the employee understands the importance of keeping an accurate track of hours’ work.
Keep in mind that an adjustment to hourly may produce some hurt feelings and dissatisfaction. Often, employees see exempt status as a higher position than and hourly employee or if they are like me, just don’t like to fill out time cards.
While you are checking the salary requirements, HRCentral also recommends reevaluating your job descriptions for accuracy and ensuring that each position is truly exempt.
For more detailed information on how to prepare, On July 2, 2015 we published an article for preparing for the new exempt rules. Preparing for New Exempt Rules
It’s not too late to be prepared, HRCentral is here to help you and your HR Department be prepared. Contact us today.
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In the ever-changing and fast paced professional world we work in, one thing we must always be aware of is how our polices and procedures reflect the constantly evolving culture we live in. Federal and State labor and employment law is therefore, always changing and being updated to adapt and change to mirror these factors. (more…)