Memo: Exempt Employee Update

Effective January 1, 2020 the U.S. Department of Labor has increased the minimum salary for overtime exempt employees.

The exempt “white-collar” salary threshold was increased to $684 per week or $35,568 annually. Any employee making less than $35,568 per year needs to be paid time-and-a-half for any time worked over forty hours. Non-discretionary bonuses, commissions, and incentive payments can make up to 10% of the salary when evaluating exemption status.

To stay in compliance, salaries should be reviewed to ensure they exceed the new annual amount of $35,568. If they do not there are four options:

  1. Convert the salary to an hourly wage and pay the employee hourly
  2. Continue to pay the current salary, and track hours worked
    1. Maintain documentation that salaried employees did not work over forty hours per week
    1. pay overtime at a calculated rate based on the total number of hours worked that pay period
  3. Increase the salary amount to meet the increased wage requirement

The job duties tests, for if the job description meets the white-collar requirements (i.e. executive, administrative, professional, outside sales, and computer employee) still apply.

Please contact your client representative if you have any questions regarding this notice or its implementation.

Additional information can also be found at: