By: Carl Habekost, Esq.
It is difficult to remember anything from 2020 other than the COVID-19 virus associated health and safety concerns, as well as the outpouring of COVID-19 related laws and policy changes. However, employers should remember back to January of 2020 when the Department of Labor published the salary threshold change for salaried exempt and highly compensation employees under the FLSA.
By way of background, for many years, the threshold salary was $455 per week, or $23,660 per year, for exempt employees. In 2016, the Obama administration proposed a change to increase the threshold to $47,476 per year. Litigation ensued and eventually the Fifth Circuit Court of Appeals upheld an injunction delaying implementation of the Obama administration’s rule. The Trump Administration then published a rule that took effect on January 1, 2020, which raised the salary threshold to $684 per week or $35,568 per year for employees under the executive, administrative, or professional categories. In addition, the new rule also raised the total annual compensation level necessary to meet the “highly compensated” exempt from overtime to $107,432 per year. Employers should remember that the amount of salary paid to an employee is only one factor to determine whether an employee qualifies for exemption from overtime. Employees must also meet the duties requirements under each exemption category.