By Eric J. Uhl / September 25, 2019
In March 2019, I wrote about the U.S. Department of Labor’s proposed revisions to the minimum salary requirements for the so-called “white collar” exemptions under the Fair Labor Standards Act (“FLSA”). On September 24, 2019, the DOL issued the long-awaited final rule, setting the minimum salary level for executive, administrative, and professional employees at $684 per week, or $35,568 per year. Under the new rule, employers may satisfy the requirement by paying up to 10% of the minimum salary level, or $3,556.80, in commissions, bonuses, and other non-discretionary incentives. In addition, the new rule increases the minimum salary for easier-to-meet highly compensated employee exemption test from $100,000 to $107,432 per year.
The DOL’s new minimum salary level follows the 2015 proposal to increase the minimum salary level to $913 per week ($47,476 per year), after a federal court enjoined the rule from going into effect in November 2016. The federal regulations on the minimum salary level were last updated in 2004, when the DOL increased the required salary level from $150 per week to $455 per week. The new final rule will take effect on January 1, 2020.
Note, however, that under Maine law, the minimum salary level for exempt employees must exceed 3000 times the applicable state minimum wage—or the rate established by the U.S. DOL, whichever is higher. Currently, the minimum salary level under Maine law is $33,000 per year (3000 x $11), or $634.62 per week. As of January 1, 2020, when the new federal rule will go into effect, the minimum salary level under Maine law will be $36,000 (3000 x $12), or $692.31 per week—which will be higher than the new federal minimum. Moreover, the Maine minimum wage—and therefore the Maine minimum salary level for exempt employees—will continue to increase each January 1st by the increase in the cost of living as measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the Northeast Region. In addition, Maine law currently does not recognize the exemption for highly paid employees or an employer’s ability to meet the minimum salary level through bonuses, commissions, and other incentives.
It is also important to remember that, for an employee to be exempt from overtime requirements, the employee must not only be paid on a salary basis at the minimum salary level, but the employee must also meet specific duties tests that govern the employee’s particular position.
Please contact us for more information on how you should pay salaried employees to comply with both federal and state requirements, or if you have questions about making sure that your exempt employees meet the applicable salary level test, the salary basis test, and the duties test.
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