The Department of Labor (DOL) has updated and revised Fair Labor Standards Act (FLSA) regulations concerning exemptions from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees, resulting the expansion of overtime pay eligibility to more employees. Final Rule – 29 CFR 541
What’s New? To be considered non-exempt under FLSA regulations, a position must meet three tests: the salary basis test, the salary level test, and the duties test. There are two salary level tests that set the minimum amount an employee can earn to be considered exempt from FLSA overtime protections: the standard salary test and the highly compensated employee total-compensation test.
While the salary basis and duties tests remain unchanged, the DOL’s new final rule increases the compensation thresholds for both the standard salary level test and the highly compensated employee test as explained below:
New Standard Salary Level Threshold
- Before July 1, 2024: $683 per week ($35,568 annualized)
- Effective July 1, 2024: $844 per week ($43,888 annualized)
- Effective January 1, 2025: $1,128 per week per week ($58,656 annualized)
New Highly Compensated Employee Total-Compensation Threshold
- Before July 1, 2024: $107,432 per year, including at least $684 per week paid on a salary or fee basis
- Effective July 1, 2024: $132,964 per year, including at least $844 per week paid on a salary or fee basis
- Effective January 1, 2025: $151,164 per year, including at least $1,128 per week paid on a salary or fee basis
After 2025, the final rule provides for updates of these thresholds every three years beginning on July 1, 2027 to reflect current earnings data.
Anything to do now? Now is a good time to reassess the classification of all employees. Before July 1, 2024, prepare to (i) raise salaries as needed to meet the minimum threshold or (ii) reclassify employees who will no longer meet the minimum threshold as non-exempt and take the necessary steps to begin paying overtime as appropriate. Should you have any questions regarding these updates, please do not hesitate to contact our firm.
Should you have any questions regarding this ruling, please do not hesitate to contact our firm.
