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US Department of Labor Hands Down Changes on Overtime

by Sarah Skillin Woodard

According to state statute, Maine “recognizes exemption from overtime for people working in a ‘bona fide executive, administrative or professional capacity’ and requires that employers pay a salary according to the requirements of the Federal Fair Labor Standards Act (FLSA).” Maine’s mandated minimum wage increases affect the overtime salary threshold, however.

Maine and federal law use a similar test to determine if an employee is exempt from the overtime provisions of the law.

  1. The employee must be paid on a salary basis. This means an employee regularly receives a predetermined amount of compensation each pay period.
  2. The salary must exceed a certain salary threshold. In Maine, this salary threshold is currently $33,000, however, it becomes $36,000 on January 1, 2020 with the mandated minimum wage increase. (See below.)
  3. The employee’s job duties must meet certain tests. There are slightly different tests for the administrative, professional and executive exemptions.

Here is what the new federal rule change does:

  • Updates the standard minimum level for salaried workers, raising it from $455 per week ($23,660 per year) to $684 per week, or $35,568 per year. Because Maine’s minimum wage increases on January 1st, 2020, our salary threshold will be $36,000 per year – higher than the federal threshold. The higher one prevails. (It is calculated by multiplying the minimum wage by 3000… $12 x 3,000 = $36,000.)
  • Raises the salary minimum for highly compensated employees (HCE) from $100,000 a year to $107,432 annually, of which $684 must be paid weekly on a salary or fee basis. This should not be a major issue in Maine as we don’t have many hourly employees making $107K+/year.
  • Permits employers to treat non-discretionary bonuses and incentive payments (including commissions) paid on an annual or more frequent basis to satisfy up to 10 percent of the standard salary level.
 The US DOL announced it intends to propose updates to the salary and compensation levels on a regular basis, to ensure that these levels provide useful tests for exemption. It declined, however, to set a regular schedule, e.g., every four years. Changes to this rule have not been made since 2004, but we’ll track developments and report any future increases.
The Final Rule goes into effect on January 1, 2020. The new rule does not alter the existing duties tests for executive, administrative, or professional employees.
For more information, the Department of Labor has a comprehensive FAQ on their website.

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