4 | Classification Guidebook © 2024 Seyfarth Shaw LLP | www.seyfarth.com allowance noted above does not apply to the minimum salary component of the HCE exemption Additional payments to satisfy the total annual compensation threshold can include the following amounts earned during a 52-week period: (i) commissions; (ii) nondiscretionary bonuses; and (iii) other nondiscretionary compensation o An employer may utilize any 52-week period as the year, such as a calendar year, a fiscal year, or an anniversary of hire year—if the employer does not identify some other year period in advance, however, the calendar year applies An employer may also count toward total annual compensation an end-of-year catch-up payment made during the last pay period or within one month after the end of the year C. The Duties Tests Remain Unchanged No Changes to the Duties Tests When it first proposed the new rule, DOL asked questions regarding the exemptions’ duties tests—particularly the primary duty test—but did not propose specific language In the final rule, DOL does not change the duties tests Just as before, there are no exceptions for part-time employees or employees of nonprofits (though depending on the circumstances, certain non-profits and their employees may not be covered by the FLSA) D. Deadline to Comply Phase one increase took place on July 1, 2024, and Phase two increase takes place on January 1, 2025. Any salary adjustments needed to meet the $844/week threshold must have been in place before the July 1, 2024, effective date to ensure continued exempt status Holiday schedules will need to be accounted for when planning for the second phase increase on January 1, 2025
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