This isn’t the first time in recent years that we’ve had a final rule issued increasing the salary threshold for the white-collar exemptions. That translates to thousands of extra payroll dollars ($11,908 annually) for companies like retail, dry cleaners, restaurants, cleaning companies and lots of other businesses with traditionally lower wages. The FLSA's minimum salary requirement is set to remain the same in 2021. Although the overtime solutions presented here are legal, they may be perceived as unfair by employees who are expecting to earn more money when the new law is passed. The new state minimum wage will be $13.69 an hour, and will take effect Jan. 1, 2021. Note, however, that under Maine law, the minimum salary level for exempt employees must exceed 3000 times the applicable state minimum wage—or the rate established by the U.S. DOL, whichever is higher. Employers may use nondiscretionary bonuses and incentive payments (including commissions) paid on an annual or more frequent basis, to satisfy up to 10 percent of the standard salary level. This number was based on the 20 th percentile of weekly earnings for full-time salaried workers in the lowest income census region (currently the South). Then, any hours worked over 40 would require a payment of “half-time”, since the all the straight time would have already been paid. Salary is only one part of the requirements for exempt status. Here are the highlights: 1. These solutions are allowed according to the code of federal regulations. Minimum Wage (2021) In keeping with the gradual increase in the State’s minimum wage levels, the new tiered rates across the State, effective December 31, 2020, are listed below. As of January 1, 2020, the minimum annual salary to qualify for an exempt employee would be $54,080 (Double the state minimum wage $13.00/hour for employers with 26 or more employees is $26.00/hour x 40 hours/week x 52 weeks = $54,080). Salary Threshold for Exempt Employees (2021) Finally, the tiered salary thresholds required for exempt status are also rising effective December 31, 2020. Bill also regularly counsels…. The law introduced minimum wages and overtime pay, and created criteria for determining whether an employee is “exempt” from overtime pay requirements or is “non-exempt” and therefore entitled to overtime pay. The new final rule will take effect on January 1, 2020. Some states have a higher salary threshold than the federal law (or have no HCE exemption or no credit for bonuses/commissions against the salary level or have more narrow duties requirements). Increased Salary Threshold for Overtime Exemption Exempt Executive, Administrative, Professional and Computer Employees (EAP) Under this rule, employers must pay salaried exempt EAP employees at least $684 per week on a salary basis. For 2021, the Washington minimum wage will be $13.69 per hour (an increase from the current $13.50 per hour). is a labor and employment boutique law firm representing private and public sector employers in all aspects of labor and employment law, including counseling and compliance, employment litigation, union-related matters, and employee benefits. Oregon law also permits the payment on a fee basis without jeopardizing the salary basis of otherwise exempt employees, provided the fees are paid each pay period and are not less than the equivalent of the applicable state minimum wage. 10/6/2020. In 2016, the DOL, under President Obama’s administration, issued a final rule increasing the salary threshold to $913 per week … $780 per week ($40,560 annually) October 3, 2022. As co-chair of the firm’s Labor and Employment Practice Group, Bill is particularly versed in all aspects of state and federal law relating to minimum wages, overtime, exemptions, and wage payment issues. 1.25 x Washington Minimum Wage ($35,100/year) ($675/week) (The new rate under the FLSA, effective January 1, 2020, is $35,568/year, or $684/week) Same as for larger employers. Aside from the legalities, there is the consideration of the “psychological contract” between employee and employer. This change does not mean that anyone making $684 per week will be exempt from overtime. This latest increase will move California one step closer to its goal of a $15 per hour minimum wage. Washington state and Seattle minimum wages for non-exempt employees are set to go up on January 1, 2020. In addition to New York’s minimum wage increase, the minimum salary that must be paid to workers classified as exempt under New York State Labor Law’s administrative and executive exemptions increased for 2020. Effective January 1, 2020, the federal government is raising the minimum salary requirement for exempt positions from $455 to $684. On Tuesday, the U.S. Department of Labor issued its final rule concerning overtime exemptions. Effective January 1, 2020, however, the minimum salary level to be exempt will increase to $684 per week ($35,568 per year). That amount plus the regular salary of $500 would amount to $527.78. More narrowly, the minimum salary level varies by business size. Salary Threshold for Exempt Employees (2021) Finally, the tiered salary thresholds required for exempt status are also rising effective December 31, 2020. $684 per week ($35,568 annually)* *This is the current level required by federal law, which has been in effect since January 1, 2020. If the criteria of the New York State exception match those in the FLSA, this Department usually applies the criteria consistently with the FLSA, its regulations, and interpretations issued by the U.S. Department of Labor. $585 = 40x + 7.5x So, exempt employees in Massachusetts will also have to be paid at the new higher salary threshold beginning January 1, 2020. Effective January 1, 2020, however, the minimum salary level to be exempt will increase to $684 per week ($35,568 per year). Under the rule, employers may apply a limited portion of certain nondiscretionary commissions and bonuses to meet the minimum salary level for the exemptions. New York State employers, though, must be mindful that, also as of January 1, 2020, they must pay exempt employees substantially higher minimum salaries, or those employees may be eligible for overtime pay under New … Erin is an associate at Franczek P.C. raises the minimum salary requirement for white-collar exempt employees to $684 a week, from a previous high of $455 a week. The new rules start with setting the salary threshold at 1.25 times the state’s hourly minimum wage. This method works best with standard workweeks. Bill also has extensive litigation experience, representing employers in federal and state courts and administrative agencies such as the U.S. and Illinois Departments of Labor and the Equal Employment Opportunity Commission. 40 hours times $12.315 = $492.60 Committing to updating the salary threshold more regularly. As with minimum wage, the salary thresholds vary depending on the employer’s location and the number of employees. Employers … $585 = 47.5x As with any business decision, all factors should be considered before making a final determination. Rulka Human Resources Consulting, All Rights Reserved, New Minimum Salary for Exempt Employees as of 1/1/2020: How to Minimize the Impact, Employment Law for Managers and Supervisors. This means that the minimum salary for exempt employees in 2020 is either: $4,160.00 per month (or $49,920.00 annually) if the employee works for an employer of 25 or fewer people, or. In the event that the employee works less than the usual 45 hours, his pay would be less than $585; if he works more than 45 hours, his pay will be more than $585. The duties tests remain intact. We will keep you updated on any new developments as the effective date of the new rule approaches. Conduct an audit. January 1, 2021. These numbers are calculated by doubling the applicable minimum wage, multiplying that … If an exempt employee’s salary drops below the minimum salary requirement, the employee may no longer be considered exempt. X= $12.315. This isn’t the first time in recent years that we’ve had a final rule issued increasing the salary threshold for the white-collar exemptions. Just because an employer pays a salary that satisfies the new federal threshold does not mean that the employee is exempt under the minimum wage law of a state where the employee works. Minimum Threshold 2020. Bill provides management and employee training on workplace legal issues, and also conducts workplace investigations and legal audits. There are two aspects to this review – determine whether employees currently in exempt positions meet both the new minimum salary requirement and the duties test for an overtime exemption. Effective January 1, 2020, the federal government is raising the minimum salary requirement for exempt positions from $455 to $684. The new salary level is equivalent to $35,568 per year for a full-time worker. To be considered "exempt," these employees must generally satisfy three tests: Salary-level test. October 3, 2021. A second option is to calculate an hourly rate that will be equal to what the employee made previously as an exempt employee, but now including the overtime. Minimum Salary Threshold. The new thresholds will go into effect on Jan. 1, 2021. As co-chair of the firm’s Labor and Employment Practice Group, Bill is particularly versed in all aspects of state and federal law relating to minimum wages, overtime, exemptions, and wage payment issues. The minimum annual salary is $35,568.00, or $684.00 per week. To use this method we need a bit of algebra. Under Colorado’s new regulations, the state minimum salary threshold for exempt employees will become $35,568, or $684.00 per week, effective July 1, 2020… This is only one of the factors used in determining whether a worker is exempt from overtime under federal or state law. The new minimum salary is now $684 per week, or $35,568 annually. The regular rate must be calculated weekly, using all earnings for the week divided by all hours worked that week. The salary test. While the 2016 rule was criticized by many business and employer groups, the new final rule is drawing fire from advocates for workers, who wish to force the administration to adopt something closer to the blocked 2016 rules. For his work so, exempt employees must receive overtime pay on counseling and representing on. Rule goes into effect on January 1, 2020 start with setting the salary level varies by business size before! 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