In the wake of the U.S. Department of Labor’s issuance of the revised proposed rule concerning the change to the salary level for exempt employees, employers should make preparations now for the anticipated change. The proposed revised salary level of $35,308 gives some relief to employers who were facing the previous proposed increase to $47,476 annually. Both levels are an increase from the current $23,660 ($455 per week). For many employers, however, even the increase to $35,308 annually ($679 per week) might be a burden.
Under the proposed new regulation, employees with a salary of less than $679 per week must be paid time and one-half for all hours over 40 per week. In order to keep an employee who is currently earning less than $35,308 annually in the exempt category, you will need to raise the employee’s salary to at least that level. Alternatively, employers can reclassify the employee as nonexempt and maintain the employee at a salary of less than $35,308 annually, but require the employee to record work hours and pay the overtime level for hours in excess of 40 per week. The employee can also be reclassified as hourly nonexempt, with the requirement for overtime pay.
As with the previous proposed rule, employers are again faced with some difficult decisions. If employees who are currently salaried are reclassified as hourly, they potentially will view the change as a loss of status or demotion, even though their compensation might actually increase if they work overtime. Employers will need to examine all positions with a salary of less than $35,308 and decide what changes are needed. This evaluation of positions should begin immediately, as the DOL has not said when the proposed new rule would go into effect. Many experts are predicting that it could be as soon as the end of 2019.
