Nicole Mitchell DOL Ruling – How does this affect my business and employees?
Effective January 1, 2020 the minimum salary requirement for full time, salaried exempt employees will increase for the first time in 15 years. The DOL ruling is applicable to businesses of any size, small biz or Fortune 500 . Employers with workers who they have classified as “Exempt” should be taking a close look at their current annual salary and planning for any necessary payroll adjustments. Failure to do so could eventually result in the automatic conversion of employees to “Non-Exempt” and accompanying overtime pay.
Background:
The Dept of Labor is the government entity who establishes and enforces labor and employment regulations. In September 2019, a final ruling was issued that will increase the minimum salary requirement for exempt employees from $455/week to $684/week. This ruling accounts for growth in employee earnings since the thresholds were last updated in 2004. Adjustments were also made for highly compensated employees.
Employer Responsibility:
Employers who have classified workers as full time, exempt employees will be required to either adjust the current annual earnings or employee classification to remain in compliance with the DOL ruling.
Careful consideration should be taken when evaluating the impact of the employer’s solution. Clearly, increasing the payroll budget for even a small number of salaried employees may result in a significant impact to the bottom line. Alternatively, converting “exempt” employees to “hourly” also opens up the possibility of increased labor costs as they become eligible for previously unbudgeted overtime payroll expense.
Action Steps:
- Review employee classification as documented in personnel file
- Determine if annual compensation meets requirements
- Make necessary payroll or personnel adjustments
Don’t make the mistake of ignoring this regulation, it’s not worth the cost – LITERALLY.
Contact us at HR Biz for guidance and hands on assistance to protect your interests.
Schedule a complimentary consultation.
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