FEDERAL AND LOCAL WAGE AND HOUR DEVELOPMENTS

WILLS v. REVOCABLE TRUSTS: DO YOU KNOW THE DIFFERENCE?
July 9, 2019

FEDERAL AND LOCAL WAGE AND HOUR DEVELOPMENTS

By: Barbara G. Stephenson



U.S. DEPARTMENT OF LABOR DEVELOPMENTS

The U.S. Department of Labor (DOL) has finalized a new rule to raise the salary threshold for employees classified as exempt under the Fair Labor Standards Act.  The threshold, or standard salary level, last raised in 2004, will increase to $684 per week (the equivalent of $35,568 annually for a full-time employee).  The effective date of the rule is January 1, 2020.

In addition to raising the salary threshold, the rule does the following:

  • The total annual compensation requirement for “highly compensated” employees increases from $100,000 per year to $107,432 per year.
  • Employers will be able to use nondiscretionary bonuses and incentive payments (including commissions) paid at least annually to satisfy up to 10% of the standard salary level.  If an employee does not earn enough in nondiscretionary bonus or incentive payments in a given year to retain an exempt status, the employer may make a catch-up payment within one pay period of the end of the year.
  • Special salary levels for workers in the U.S. territories and the motion picture industry have been revised.

Employers now have the remainder of 2019 to consider employees currently classified as exempt, but making less than $684 per week.  Employers may choose to increase compensation to meet the new standard salary level or reclassify these employees as hourly.  In making this determination, employers should consider how many hours per week are required to perform the job duties of exempt employees.  If an exempt employee routinely works 50-60 hours per work week, it may make more business sense to raise the salary to $684 per week rather than pay overtime, at a time-and-a-half rate, owed to an hourly employee for any hours over 40 worked in a work week.

The newly-finalized rule from the Department of Labor follows the 2016 DOL rule which would have raised the standard salary level to $913 per week ($47,476 per year).  That rule was enjoined by a federal court in Texas in November 2016 and the Trump administration subsequently did not appeal the district court’s injunction of the rule.  As a result, that rule never became effective.

BERNALILLO COUNTY COMMISSION DEVELOPMENTS

The minimum wage for unincorporated areas of Bernalillo County has again been increased.  On October 15, 2019, the Bernalillo County Commission voted unanimously to raise the County’s minimum wage from $9.05 to $9.20 an hour, beginning January 1, 2020.   Such periodic increases are provided for by the Bernalillo County Minimum Wage Ordinance.

Since January 1, 2019, the city of Albuquerque’s minimum wage has been at $9.20 an hour.  Because the City’s minimum wage also is subject to periodic adjustments under the City’s Minimum Wage Ordinance, so the City’s rate may be raised for 2020.

The federal minimum wage remains at $7.25; however, the state minimum wage will increase from $7.50 to $9.00 an hour beginning January 1, 2020.  A worker always is entitled to the rate effective where the work is being done.

Also on October 15th, the County Commission amended the paid time off (PTO) ordinance it passed in August.  Under the amendments, businesses having from two to 10 employees will need to offer workers 28 annual hours of PTO rather than the 56 hours as originally proposed.  Employers having from 11 to 34 workers will need to offer 44 hours of PTO.  Companies having 35 or more workers still must provide 56 hours of PTO.  The effective date of the ordinance has been moved up from July 1, 2020 to January 1, 2020.  This ordinance applies only to unincorporated areas of Bernalillo County.