The Department of Labor has released a new proposed rule to increase the minimum salary that an employee must earn to be exempt from minimum wage and overtime under a white collar exemption.

The Rule
The proposed rule requires that salaried exempt executive, professional, administrative, and computer employees must be paid at least $679 per week on a salary basis, an increase from the current minimum of $455 per week. The rule allows for non-discretionary bonuses and incentive payments to account for up to 10% of the minimum, so long as they are paid out on at least an annual basis; currently commissions and bonuses cannot be counted toward the minimum.

The DOL also proposes that highly compensated employees must be paid at least $147,414 per year to qualify as exempt. Of that amount, at least $679 per week must be paid on a salary or fee basis.

The anticipated effective date of this rule is January 2020.

The rules around tip pooling have been mired in litigation since 2011, when regulations came into effect that forbid tip pooling between employees who customarily receive tips and those who do not. The recently passed federal budget bill has created clarity by amending the Fair Labor Standards Act (FLSA) and eliminating that rule for employers who do not take a tip credit. Since the rule has been eliminated entirely, court decisions interpreting it—such as Oregon Restaurant and Lodging Association, et al v. the U.S. Department of Labor—are irrelevant.