The Minimum Salary for Exempt Employees Went up as of January 1, 2020

In September 2019, the Department of Labor announced it was raising the minimum salary level for exempt employees—making more people non-exempt, and thus eligible for FLSA protections: specifically, overtime pay.

The old threshold was $455 a week or $23,660 per year. The new one is $684 per week or $35,568 per year. And it took effect as of January 1, 2020.

What does it mean to be “exempt”?

Under the Fair Labor Standards Act (FLSA), employees who work more than 40 hours a week must receive overtime pay. However, this rule doesn’t apply to all employees.

“Non-exempt” employees are not exempt from FLSA protections—so they’re entitled to overtime pay if they work more than 40 hours a week.

“Exempt” employees are exempt from FLSA protections. Employers aren’t required to pay these workers overtime, no matter how much they work.

In addition to earning more than the cutoff threshold, those categorized as exempt are supposed to be executive, professional, and administrative workers, or those working under commission-based contracts.

However, employers often find ways to categorize most of their white-collar employees as exempt so they don’t have to pay overtime.

What effect will the new law have?

Under the new law, more people now qualify for overtime pay. You can make more money and still be considered non-exempt, and protected under FLSA rules.

According to the Department of Labor, this law makes an estimated 1.3 million additional people in the United States eligible for overtime pay—and employers will pay about $298.8 million more in overtime pay in 2020.

The Department of Labor predicts that some employers will raise their employees’ paychecks to $35,568 per year so they don’t have to pay overtime. But many employers will have to convert employees to non-exempt status.

This means either the employers will have to start paying overtime, or reduce the number of hours the employees work—because now they have to pay for those hours.

Got questions about your status? We can help

Do you believe your employer has wrongly categorized you as exempt? If so, we can help.

A knowledgeable employment lawyer can assess your situation, defend your rights in court, and ensure that you receive all the compensation you’re entitled to.

Get in touch today for a free, confidential consultation at 267-273-1054 or murphy@phillyemploymentlawyer.com.

The information provided here does not constitute legal advice. It is intended for general purposes only. If you have questions about a specific legal issue, you should speak to an attorney.