Oct 15, 2019

UPDATE: DOL Highly Compensated Employee Exemption

Employee Salary Exemption

Effective January 1, 2020, the total annual compensation requirement for the highly compensated employee exemption shall be $107,432 per year, of which $684 must be paid weekly on a salary or fee basis.  The rule does not alter the duties requirements for this exemption, namely that the employee’s primary duties must include performing office or non-manual work and he or she must customarily and regularly perform at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee.

Importantly, the new salary threshold levels do not apply to United States territories.  The DOL set a special salary level of $455 per week for Puerto Rico, the U.S. Virgin Islands, Guam, and the Commonwealth of the Northern Mariana Islands as well as a special salary level of $380 per week for American Samoa.  The final rule is silent on whether the highly compensated employee threshold applies to these territories; however, the DOL’s logic in creating special salary levels suggests that the increased threshold will not apply.  We will continue to monitor this area and provide further information once clarification is provided.

This alert is intended to reflect the finalized, revised salary threshold of $107,432 per year, which was reduced from $147,414 that was originally proposed in the DOL’s Notice of Proposed Rulemaking.

If you have any questions regarding the issues raised in this client alert, please contact your Labor and Employment counsel at Smith, Gambrell & Russell, LLP.