Written by Christy K. McDonald from Dickinson Wright on June 4, 2024
On July 1, 2024, the Department of Labor’s rule raising the salary threshold for workers to be exempt from the overtime requirements of the Fair Labor Standards Act becomes effective. Labor lawyers and HR professionals have long expected, consistent with history, that a court would enjoin the DOL’s new rule (the fluidly named “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees,” 29 CFR 541) before its July 1, 2024 effective date. However, such a ruling has not yet been issued, and it is now crunch time to be sure your company is ready to comply with the rule.
Employees are exempt from the Fair Labor Standards Act’s minimum wage and overtime protections if they are employed in certain positions as set forth in 29 CFR 541. To fall within the “exempt” classification, an employee must (1) be paid on a salary basis; (2) be paid a specified minimum salary amount; and (3) perform specified job duties as set forth in the regulations or they must be paid enough to be considered a highly compensated employee.
The DOL’s new rule increases the specified minimum salary amounts for an employee to be exempt from overtime pay requirements. The chart below identifies the applicable salary increases, which are set to increase on July 1, 2024, and January 1, 2025, and again every three years on a continuing basis. This rule will primarily impact employees with annual salaries between $35,000 and $44,000 as of July 1, 2024) and $44,000 and $58,656 (as of January 1, 2025).
To comply with the rule, employers should:
- Identify all employees on payroll who are classified as “exempt”;
- Identify how many and which exempt employees earn less than $844 per week;
- Consider whether to re-classify those employees as non-exempt or to give pay increases in lieu of making overtime payments.
Note: These earnings thresholds do not apply to certain types of employees, including doctors, lawyers, teachers, and outside sales employees.
For more details, please visit the Department of Labor’s FAQ and resource pages, which include a helpful YouTube Video.
