The U.S. Department of Labor (DOL) has recently issued a new Fact Sheet – Treatment of Bonuses for Exempt White Collar Employees. As with any fact sheet, the sole purpose is to attempt to make its unclear regulations clear, without changing or interpreting the regulations. That being said, they are often helpful (though also often fail to overlook exceptions which may be favorable to the employer and focuses on the general rule for the employee), and certainly can provide a look into how the DOL interprets its own regulations.
In this case, the Fact Sheet provides a regurgitation of the December 1 regulations as to how non-discretionary bonuses may now (in December) be included (up to 10%) toward the salary level test. It provides examples of how this will work with highly-compensated employees (HCE), confirming that the HCE must still meet the salary basis test with only a 10% credit towards the $47,476 threshold. In other words, a HCE that makes less than the new $47,476 salary threshold, let’s say, $15,000, but earns a $145,000 bonus, would not meet the exemption, even though the total compensation is more than the $134,004 threshold for HCEs. The DOL is quick to explain this does not mean bonuses must be capped, they can make more than 10% bonuses, but the salary threshold of $47,476 must be only credited 10% of bonuses – even if the person is ultimately a HCE. In addition, the DOL provides examples for the quarterly catch-up payments, noting such payments are credit toward prior quarter’s salary requirement and not the current quarter in which it was paid. It’s an easy read, so I won’t go on, but it’s out there, and I expect more to come, especially as we are T-minus 30.