The Department of Labor (DOL) will be implementing several important updates to regulations related to the FLSA over the next few weeks. These updates include an increase in the minimum salary required for overtime exempt “white-collar” employees and critical changes to DOL regulations related to the regular rate of pay. It would be nearly impossible to properly address these changes in a single post. This is the first of several posts related to the updates and how they will likely impact fire departments moving forward.
2020 DOL Update – Part I – Increased Salary Requirement for Overtime Exempt “White-Collar” Employees
On January 1, 2020, the DOL will finally update the minimum salary threshold for overtime exempt “white-collar” employees. This update marks the end of a long and drawn out process that officially began midway through President Barak Obama’s second term in office.
Whether any employee can be properly classified as a “white-collar” overtime exempt employee requires a careful examination of two critical factors. First, the salary the employee is paid, and second, the duties that employee performs. The new updated regulations only apply to the first factor; the minimum salary an employee must receive in order to be classified as an overtime exempt “white-collar” employee.
The current regulations require overtime exempt “white-collar” employees be paid a minimum of $455 per week (or $23,660 annually). This relatively low salary threshold has been the subject of much debate over the years. It seemed illogical to some that any worker earning as little as $455 per week would be exempt from both the overtime and minimum wage protections of the FLSA.
In 2016, at then President Obama’s direction, the DOL implemented a drastic increase to the minimum salary requirement for overtime exempt “white-collar” workers. The Obama led regulations doubled the minimum salary requirement from $455 to over $900 per week. Additionally, the new salary requirements included a mechanism for automatic increases designed to keep pace with inflation. While this increase was seen as welcome news for millions of workers across the country, including some public safety professionals, pro-business lobbyists and many conservative political figures opposed the increase. That update—initially blocked through legal action—was never implemented. Eventually it was struck down by a federal appeals court on procedural grounds in August 2017. For more on that story click here.
However, that was not the end of the story. The DOL went to work, early in President Trump’s term, drafting “compromise” regulations that would increase the current low salary level threshold ($455/week) to a higher and more relevant figure, but not as high as proposed by President Obama’s DOL.
Effective on January 1, 2020, the new updated minimum salary for “white-collar” overtime exempt employees is $684 per week (or $35,568 annually). This means that any employee that makes less than $684 per week cannot be classified as an overtime exempt “white-collar” worker. The DOL estimates that 1.3 million new workers will now be eligible for overtime under the new regulations. As a point of contrast, the DOL had estimated over 4 million workers would have become eligible for overtime if the regulations proposed by the Obama led DOL were not invalidated.
The updated DOL regulations also increase the minimum salary necessary to be classified as an overtime exempt “highly-compensated” employee from $100,000 to $107,432 per year. The “highly-compensated” overtime exemption is a rather narrow exemption found within the DOL’s overtime exempt “white-collar” regulations. Employees that meet the requirements of this exemption can be classified as overtime exempt “white-collar” employees even if they do not meet all of the requirements found in the regulations. For more on the “highly-compensated” overtime exemption as it applies to firefighters, click here.
Fire service implications from the DOL’s new updated salary requirements may seem minimal at first glance. The vast majority of firefighters, or as the DOL labels them “first responders” are automatically entitled to overtime under DOL regulations. However, some company level and many senior fire department officers are classified as overtime exempt “white-collar” employees. If you are one of these professionals, this update may serve as welcome news. For more on that click here.
There are two additional takeaways from this new DOL update. First, many states have already adopted higher minimum salary levels for exempt employees. Employers in those states must follow both the federal minimum as prescribed in the FLSA and DOL regulations as well as local state wage and hour requirements. Second, the DOL did not update any of the non-salary related requirements found in the various “white-collar” overtime exemptions. The DOL’s First Responder regulations and other requirements related to the necessary job duties of overtime exempt employees remain unchanged.
This is the first of a multi-part series covering important DOL updates being implemented this January. Please stay tuned for the next.