DOL Finalizes Salary Threshold Increases for Overtime Exempt Status Effective 7.1.24
Understanding the New Overtime Rule: What You Need to Know
On April 23, 2024, the U.S. Department of Labor (DOL) announced a significant update to the Fair Labor Standards Act (FLSA), introducing a new rule that alters the landscape for white-collar workers and highly compensated employees. The Biden-Harris administration has issued a final rule to expand overtime protections, ensuring that millions of lower-paid salaried employees receive increased compensation to remain exempt for overtime purposes. Here is a quick overview of how this may affect you.
What’s the New Rule?
Beginning July 1, 2024, the salary threshold for exempting salaried executive, administrative, or professional employees from federal overtime pay will increase from $684/week ($35,568 annually) to $844/week ($43,888 annually), and then again a bump up to $1,128/week ($58,656 annually) on January 1, 2025.
This final rule also increases the total annual compensation threshold required for an employee to qualify for the FLSA’s “highly compensated employee” exemption. Starting July 1, 2024, the annual compensation requirement to meet the requirements for this exemption will increase from $107,432 a year to $132,964 a year, and then increase to $151,164 a year on January 1, 2025.
Who is Affected?
For any executive, administrative or professional employees making between $35,568 and $58,565 annually that are currently treated as exempt, you will want to analyze whether it makes sense to increase their income or make preparations to properly track their overtime by July 1, 2024 or January 1, 2025 applicable. There is an exception carved out and a different rule may apply to teachers. For any employee currently exempt under the highly compensated employee exemption making between $107.432 and $151,164 you wish to keep in an exempt status, you will want to engage in the same analysis.
Ready to Navigate These Changes?
Understanding the new overtime rule is important for both employees and employers.
For more details about this overtime rule and its impact, there is more information on the Department of Labor's website. If you wish to explore the regulations independently, you can access them here — pertinent modifications begin on page 130 of the downloadable PDF.
If you still have questions or concerns about how these updates impact your overtime payments or overall financial situation, do not hesitate to reach out for guidance from trusted experts. These changes involve significant increases and will take time to determine and implement best case scenarios.
References:
U.S. Department of Labor. (2024). Final Rule: Raising the Salary Threshold for Overtime Exemptions under the Fair Labor Standards Act. Retrieved from https://www.dol.gov/newsroom/releases/whd/whd20240423-0
