On September 24, 2019, the Department of Labor (DOL) released the long-anticipated final rule defining Overtime Exemption requirements, including guaranteed salary requirements, for the White Collar Exemptions- Executive, Administrative, Professional and Highly Compensated. 

Key provisions of the final rule are as follows:

1) The new rule goes into effect January 1, 2020.

2) The new guaranteed salary requirement is a minimum of $684.00 per week ($35,568.00 annually). This salary requirement applies to the Executive, Administrative and Professional Exemptions.

3) For the Highly Compensated Exemption, the new salary requirement is $107,432.00.

Of noted importance, and as it relates to the Executive, Administrative and Professional Exemptions (Highly Compensated excluded), is the ability for the employer to apply Non- Discretionary Bonuses and Incentive Payments (including a valid commission payment) to satisfy up to 10% of the guaranteed salary level requirement of $35,568.00. Please note that Non-Discretionary Bonuses and Incentive Payments, such as commissions, must be well defined and meet the DOL’s requirements under the regulation.

The DOL did not change any of the White Collar Exemption duties tests. Further, the DOL permits the compliant use of the Fluctuating Workweek Method of Payment which is a pay plan that may be recommended for select positions/cases by SESCO. 

We recommend that you begin to review positions that may be impacted by the new salary threshold but not to make any pay plan changes at this time. The SESCO team is available to discuss pay plans with our clients and client associations. Additionally, as a reminder all of our retainer clients can receive a Wage and Hour/HR compliance assessment. If you are not a SESCO retainer client, simply call or email us and we’ll be happy to discuss our monthly Service Agreement.

For assistance, please contact us at 423-764-4127 or by email at sesco@sescomgt.com