Skip to Main Content

Keeping you informed

New Minimum Salaries Now in Place for Overtime Exemptions

    Client Alerts
  • January 15, 2020

As of January 1, new minimum salary levels took effect for employers claiming certain exemptions from the overtime provisions of the Fair Labor Standards Act. For employees who meet the duties requirements of the executive, administrative, or professional exemptions, the minimum weekly salary is now $684 per week, or $35,568 annually. The minimum salary for the highly compensated employee exemption is now $107,432. The minimum weekly salary for the computer professional exemption also increased to $684, but employers have the option of paying an alternative $27.63 hourly rate.                                        

Employers may claim up to 10 percent of the required minimum salary though payment of non-discretionary bonuses, incentive compensation, or commissions, as long as such amounts are paid on at least an annual basis. If the employee fails to achieve sufficient incentive compensation to meet the minimum salary, the employer must pay the difference by the next pay period in order to preserve the exemption.

Employers impacted by these changes have the option of either increasing the affected employees’ salaries or converting them to non-exempt status, meaning that the employer must maintain accurate records of hours worked and pay overtime as appropriate. Unlike the 2016 proposal, these minimum salary amounts will not increase with inflation, and future adjustments will require new action by the Department of Labor.