(May 1, 2024) - On April 23, 2024, the Department of Labor released a final rule raising the salary thresholds for certain overtime exemptions under the federal Fair Labor Standards Act.
The rule is expected to result in approximately four million employees losing their exempt status under the FLSA. Therefore, employers must either raise the salaries paid to such employees to maintain the overtime pay exemption or reclassify their positions to non-exempt, paying them an hourly wage and overtime, where applicable.
The FLSA currently requires covered employers to pay employees a minimum wage and overtime pay of at least 1.5 times an employee’s regular rate of pay for those who work more than 40 hours in a week. Currently, an executive, administrative and professional employee making $684 per week, or $35,568 per year, can be exempt from the FLSA. The current minimum threshold to qualify for the white collar highly compensated employee exemption is $107,432 per year.
Beginning July 1, 2024, this final rule will change those thresholds to $844 per week, or $43,888 per year and the highly compensated threshold to $132,964 per year. Beginning Jan.1, 2025, this final rule will further raise the thresholds to $1,128 per week or $58,656 per year and the highly compensated threshold to $151,164 per year.
The salary threshold will be updated every three years, starting July 1, 2027.