The Department of Labor (DOL) announced a significant development regarding overtime pay for salaried workers. On April 23, 2024, the DOL released its final rule that will increase the salary threshold for overtime exemptions under the Fair Labor Standards Act.
Key Points:
The new rule applies to salaried executive, administrative, and professional employees who are currently exempt from overtime requirements.
The salary threshold will increase in two stages for lower-paid salary workers:
- Effective July 1, 2024, the minimum salary for an overtime exemption will be $43,888 annually.
- Effective January 1, 2025, the minimum salary for an exemption will be $58,656 annually.
- This is a substantial increase from the current threshold of $35,568 annually.
The salary threshold will also increase in two stages for highly compensated employees:
- Effective July 1, 2024, the minimum salary for an overtime exemption will be $132,946 annually.
- Effective January 1, 2025, the minimum salary for an overtime exemption will be $151,164 annually.
- This would increase the current minimum salary threshold of $107,432 annually by $43,732.
What This Means for You
Employers will need to reclassify certain previously exempt employees as non-exempt if their salary falls below the new thresholds. These reclassified employees will be entitled to overtime pay for any hours worked over 40 in a workweek.
Next Steps
We recommend employers take the following steps:
- Analyze your workforce to identify employees potentially affected by the new salary thresholds.
- Update payroll systems and timekeeping procedures to account for potential overtime pay.
- Consult with legal counsel to ensure proper classification of salaried employees under the revised rule and to discuss the details of the new rule and the specific impact it may have on your business.
Please do not hesitate to contact our employment attorneys, Will Cherry or Jennifer Weaver, if you have any questions.
