Salary is only one part of the requirements for exempt status. 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. Erin is an associate at Franczek P.C. *Note: The Department of Labor revised the regulations located at 29 C.F.R. For example, if the usual schedule is 45 to 50 hours per week, the agreement may be that $500 will cover all the straight time up to 50 hours per week. The employee would be entitled to 5 hours of overtime at : ($11.11*.5) times the 5 hours = $27.78. The United States Department of Labor issued a final regulation to take effect January 1, 2020, raising the minimum overtime salary threshold for exempt employees under federal law to $35,568. 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 … 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. Conduct an audit. Erin defends employers against discrimination cases filed in a variety of forums, including state and federal court, the Illinois Department of Human Rights, the Equal Employment Opportunity Commission and the Chicago Commission on Human Relations. part 541 with an effective date of January 1, 2020.WHD will continue to enforce the 2004 part 541 regulations through December 31, 2019, including the $455 per week standard salary level and $100,000 annual compensation level for Highly Compensated Employees. These employees are known as "exempt" employees. Federal / Executive, Administrative, and Professional Exemptions. Seyfarth Synopsis: As they have each year since 2016, the minimum wage and exempt salary threshold will increase for New York employers effective December 31, 2020.. Minimum Threshold 2020. 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. 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… January 1, 2021. 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. The FLSA and the State Minimum Wage Act exempt employees who work in a bona fide administrative capacity from the overtime pay requirements. 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. 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. Salary-basis 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. Minimum Wage Increase. Aside from the legalities, there is the consideration of the “psychological contract” between employee and employer. As with any business decision, all factors should be considered before making a final determination. Washington labor costs are about to increase for Washington employers with minimum wage employees and, more significantly, for exempt employees currently in the salary range of $35,000 to $40,000 annually. 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. In 2021, exempt employees at smaller employers must be paid $827 per week ($43,004 annually) and $965 per week ($50,180 annually) at larger employers, consistent with the new MWA rules. Increased Salary Threshold for Overtime Exemption For employers with 25 or fewer employees, the minimum annual salary would be $49,920. 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 $4,506.67 per month (or $54,080.00 annually) if the employee works for an employer of more than 25 people. Employers … One solution is to re-structure the formerly exempt employee’s pay so that the new pay with overtime approximates what he was making previously without the overtime pay. 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. 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. Effective January 1, 2020, however, the minimum salary level to be exempt will increase to $684 per week ($35,568 per year). Almost all Oregon employers are subject to the Fair Labor Standards Act (FLSA), and the minimum salary to qualify for exemption under that law is $684 per week or $35,568 annually (allowing up to 10% of the salary basis threshold to be met with nondiscretionary bonuses/incentives, including commissions, paid at least annually). Large businesses (51 or more employees): An exempt employee must earn a salary of at least 1.75 times the minimum wage, or $958.30 a week ($49,831.60/year). 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. That amount plus the regular salary of $500 would amount to $527.78. In 2016, the DOL, under President Obama’s administration, issued a final rule increasing the salary threshold to $913 per week (or $47,476 annually). Seyfarth Synopsis: As they have each year since 2016, the minimum wage and exempt salary threshold will increase for New York employers effective December 31, 2020. The salary threshold is an exemption criteria that sets a minimum pay threshold below which employees must receive overtime pay. For example: the minimum wage in 2020 will be $13.50, or $540 per week for a … There are options for reducing the impact of the new overtime rule. The salary test. For 2020, exempt employees must be paid $684 per week ($35,568 annually), consistent with federal law. New York City Employers (11 or more employees) / Executive and Administrative Exemptions. To re-structure the pay, the employer and employee must agree in advance on a given salary that will cover a certain number of hours. More narrowly, the minimum salary level varies by business size. Like the minimum wage, the salary levels depend on employer size and location. No changes to the duties test have been made. Minimum Salary Threshold July 1, 2020 $684.00 per week ($35,568 per year) January 1, 2021 $778.85 per week ($40,500 per year) January 1, 2022 $865.38 per week ($45,000 per year) January 1, 2023 $961.54 per week ($50,000 per year) January 1, … The table below outlines New York’s 2020 minimum wage: The minimum wage is expected to increase annually until it reaches $15.00 per hour by the end of 2021 for all of New York State. Effective January 1, 2020, however, the minimum salary level to be exempt will increase to $684 per week ($35,568 per year). Talk to an Expert 937-470-5790. $4,506.67 per month (or $54,080.00 annually) if the employee works for an employer of more than 25 people.⁠40. 10/6/2020. The new minimum salary is now $684 per week, or $35,568 annually. With the state salary thresholds for exempt employees now a multiplier of the state minimum wage, the thresholds will also rise on Jan. 1, 2021. The 2016 rule also increased the minimum salary for HCEs (to $134,004), allowed employers to use nondiscretionary bonuses and incentive pay to satisfy up to 10% of the salary threshold, and provided for automatic annual updates to keep the minimum salary level adjusted to the 40th percentile of full-time salaried workers in the lowest-wage Census region. Then, any hours worked over 40 would require a payment of “half-time”, since the all the straight time would have already been paid. To use this method we need a bit of algebra. The minimum annual salary is $35,568.00, or $684.00 per week. On January 1, 2020, California’s statewide minimum wage will increase to $13 per hour for employers with 26 or more employees and $12 per hour for employers with 25 or fewer employees. The Washington State Department of Labor & Industries (L&I) has announced the state minimum wage for 2021 and calculated the new state minimum salary thresholds for overtime exempt employees. 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. Increased Federal Salary Threshold for Exempt Employees Takes Effect on January 1, 2020 On September 24, 2019, the U.S. Department of Labor issued its final rule raising the minimum salary for exempt employees under federal law from $23,660/year (or $455/week) to $35,568/year (or $684/week), effective January 1, 2020. As of January 1, 2020, when the new federal rule will go into effect, the minimum … That is up from $13.50 an hour in 2020. The final rule takes effect on January 1, 2020 and raises the current minimum salary level for exempt employees from $455 per week, or $23,660 annually, to $684 per week, or $35,568 annually. $58,500 annually $1,125 weekly So, the regular rate may fluctuate from week to week. The new salary level is equivalent to $35,568 per year for a full-time worker. Small businesses (1-50 employees): An exempt employee must earn a salary of at least 1.5 times the minimum wage, or $821.40 a week ($42,712.80/year). This change does not mean that anyone making $684 per week will be exempt from overtime. This method works best with standard workweeks. $23,660 annually $455 weekly. Specifically, exempt employees must earn a fixed monthly salary of at least double the minimum wage for full-time employment. Bill is a partner at Franczek P.C. The new regulations require that as of Jan. 1, 2020, an employee in a white collar exempt position must be paid at least $684 per week. $35,356 annually $684 weekly. Salary Threshold for Exempt Employees (2021) Finally, the tiered salary thresholds required for exempt status are also rising effective December 31, 2020. 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). So, exempt employees in Massachusetts will also have to be paid at the new higher salary threshold beginning January 1, 2020. Frequently asked questions. increases the current-enforced compensation level for “highly compensated employees” (HCEs) from $100,000 to $107, 432 per year. As of January 1, 2020, the minimum salary amount is $692.31 per week for exempting a worker from overtime and as of January 1, 2021 the amount increases to $700.97 per week. The FLSA's minimum salary requirement is set to remain the same in 2021. In order for an … So, exempt employees in Massachusetts will also have to be paid at the new higher salary threshold beginning January 1, 2020. 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). The minimum wage applies to most employees in Georgia, with limited exceptions including tipped employees, some student workers, and other exempt occupations.. Starting in 2023, the salary threshold will adjust (i.e., increase) automatically to an amount equal to the 10th percentile of all Pennsylvania workers who work in salaried exempt positions. A thorough review of the employee handbook and a consultation with the employer’s attorney is recommended before implementing any changes to pay. 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 $4,506.67 per month (or $54,080.00 annually) if the employee works for an employer of more than 25 people. The minimum salary requirement for 2020 for white-collar workers is $54,080 for employers with 25 or fewer employees and $49,920 for employers with 26 or more employees. DOL Proposes $35,308 Minimum Salary For Exempt Employees, Supreme Court Rules Auto Service Advisers Are Exempt From Overtime, Just When You Thought the DOL’s OT Rule Was Dead, It Lives to Fight Another Day, Texas District Court Strikes Down Obama FLSA Exemption Rules, DOL Brief in Overtime Rules Case Leaves New Uncertainty, DOL Broadly Defines When a Summer Camp or Program is a Child’s Place of Care for FFCRA Leave, DOL Withdraws Industry Lists from its Retail or Service Establishment Exemption Interpretative Rule, DOL Green Lights Bonuses for Employees with Fluctuating Work Schedules, Walmart Takes Lead in Providing Paid Sick Leave in the Face of COVID-19. The new thresholds will be effective December 31, 2019 and will depend on employer size and location. The regular rate must be calculated weekly, using all earnings for the week divided by all hours worked that week. 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. Salary Test for Exempt Employees . The minimum annual salary is $35,568.00, or $684.00 per week. Erin is an associate at Franczek P.C. Review your current workforce to determine which employees will be impacted by the new changes immediately, and anticipate which employees will be impacted when the escalated thresholds take effect in 2021. If an exempt employee’s salary drops below the minimum salary requirement, the employee may no longer be considered exempt. To be considered "exempt," these employees must generally satisfy three tests: Salary-level test. FLSA Salary Threshold Increase Effective January 1, 2020 Employers with operations outside of New York should also remember that, effective January 1, 2020, the standard salary level threshold for exempt employees under the FLSA will increase from $455 to $684 per week. They are as follows: No changes to the duties test have been made. 2020 California Salary Increases for Exempt Employees. Bill provides management and employee training on workplace legal issues, and also conducts workplace investigations and legal audits. Effective Jan. 1, 2020, the thresholds are: $54,080/year for employers with 26 or more employees. OAR 839-020-0004(30)(b). Likewise, the rule increases the salary level for the highly compensated employee exemption to $107,432. All three of the above exemptions require payment of a true salary: "Salary" is defined as agreed-upon periodic compensation, intended to cover a period of at least a week, equivalent to at least $684 per week,* that is not subject to reduction on the basis of quantity or quality of work performed. Salary Threshold for Exempt Employees (2021) Finally, the tiered salary thresholds required for exempt status are also rising effective December 31, 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). Georgia's state minimum wage rate is $7.25 per hour.This is the same as the current Federal Minimum Wage rate. These numbers are calculated by doubling the applicable minimum wage, multiplying that … However, if there is any sort of contract, whether written or implied, with the employee regarding his compensation, then the employer’s ability to change the compensation may be limited. Each time the New York State minimum wage increases, the state’s minimum salary required for executive and administrative employees will increase proportionately. This is only one of the factors used in determining whether a worker is exempt from overtime under federal or state law. The rule increases the salary threshold for employees exempt under the executive, administrative, and professional exemptions (the “white collar exemptions”) from $455 per week (or $23,660 annually) to $684 per week (or $35,568 annually). The new rule is set to take effect on January 1, 2020 and increase the number of overtime-eligible employees by 1.3 million. 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. The new state minimum wage will be $13.69 an hour, and will take effect Jan. 1, 2021. Salary Threshold for Exempt Employees (2020) The tiered salary thresholds across the state are also rising in-line with the minimum wage. 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. $58,500 annually $1,125 weekly. Copyright ©2018 R.C. Her practice focuses on counseling and representing employers on various employment and labor issues. The new state minimum wage will be $13.69 an hour, and will take effect Jan. 1, 2021. Here are the highlights: 1. Using our $500 example, the regular rate for a 42 hour week is $11.90, but the regular rate for a 49 hour week is $10.20. 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. $684 per week ($35,568 annually)* *This is the current level required by federal law, which has been in effect since January 1, 2020. 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. Salary threshold implementation schedule Salary thresholds for overtime exempt workers are a multiplier of state minimum wage for a 40-hour workweek 2021 Salary thresholds Small businesses: $821.40/week ($42,712.80/year) Large businesses: $958.30/week ($49,831.60/year) When the rule takes effect July 1, 2020 Jan. 1, 2021 Jan. 1, 2022 Jan. 1, 2023 Job titles do not determine exempt status. Her labor experience includes preparing and representing clients during arbitration and unfair labor practice charge hearings, while her employment practice includes counseling…. raises the minimum salary requirement for white-collar exempt employees to $684 a week, from a previous high of $455 a week. The Final Rule goes into effect on January 1, 2020. Bill also regularly counsels employers on issues relating to the Family and Medical Leave Act (FMLA), disability and accommodations. $585 = 40x +5 (1.5x) The key, of course, is to make the salary arrangement in writing, in advance, with the employee. X= $12.315. According to the new exempt employee law that went into effect January 1, 2020, all executive, administrative, professional, computer, and outside sales exemptions require that the employee … 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. The current minimum is $23,660.00, or $455.00 per week. The federal increase in the white collar exemptions’ salary threshold has no effect on private sector employees in New York State, which uses tiered salary thresholds depending on where an employee works in the state. For individuals to qualify as exempt employees, California requires that: They perform exempt duties more than 50% of their work time, and; Exempt executive, administrative, and professional employees earn a salary of no less than two times the state minimum wage for full-time employment. This latest increase will move California one step closer to its goal of a $15 per hour minimum wage. Minimum Salary Threshold. Bill also regularly counsels…. The Final Rule goes into effect on January 1, 2020. Currently, the minimum salary level under Maine law is $33,000 per year (3000 x $11), or $634.62 per week. The New York State minimum wage rates and minimum overtime-exempt salary levels for employees working outside of New York City will increase on December 31, 2020. Broadly speaking, the minimum salary level for white-collar employees in California is twice the state’s minimum wage for full-time employment (that is, 40 hours per week). October 3, 2021. Need Help? The final rule takes effect on January 1, 2020 and raises the current minimum salary level for exempt employees from $455 per week or $23,660 annually, to $684 per week or $35,568 annually. $875 per week ($45,500 annually) Who Qualifies for the “White Collar” Exemptions? The wage and hour team at Franczek PC created this blog to provide timely, practical insights on wage and hour law to employers. Employer Type / Exemption Type. This arrangement works well with fluctuating work week hours. Minimum wage laws can affect businesses of all sizes, whether operating … 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. On Tuesday, the U.S. Department of Labor issued its final rule concerning overtime exemptions. 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. The current salary threshold is $3,466.67 a … Employees in Massachusetts will also have to be paid on a salary of least... 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