New DOL Rule Increases Salary Basis Threshold
Employers may need to give some exempt employees a raise come 2020. This week, the federal Department of Labor (“DOL”) released its new Final Rule on the minimum salary an employer needs to pay an exempt employee in order to satisfy the “salary basis” test.
Currently, an employer must pay an exempt employee a salary of at least $455 per week ($23,660 annually). Effective January 1, 2020, that level increases to $684 per week ($35,568 annually). That’s nearly a $12,000 increase, which would be about a 50% raise for an exempt employee who current makes the minimum threshold salary.
The new Rule, however, pales in comparison to what the DOL proposed, and was about to implement in 2016, before a court put a hold on that Rule (the DOL ultimately withdrew the Rule). That Rule sought to more than double the current threshold, and increase the minimum salary to $47,476.
Critics (mostly on the employer side) argued that the rationale used to justify such a significant jump in the salary basis was flawed, and that its effect would be to hurt businesses and employees alike. The new Rule took most of those concerns into account, inasmuch as there is much more consensus among business and employee advocates as to the propriety of the new Rule. To that end, although there is certainly a possibility that a court could hold up implementation of the Rule, there is less chance that an advocacy group will seek to stop this Rule.