Attention Employers: Minimum Salary Thresholds for Overtime Eligibility to Increase July 1, 2024
The U.S. Department of Labor (DOL) issued its highly anticipated final rule to increase the minimum salary thresholds for overtime eligibility under the Fair Labor Standards Act (FLSA) on April 23, 2024. The new final rule largely adopted the proposed rule (see our previous Alert for details), with some additional changes. The final rule includes a two-step increase of approximately $23,000 over the next year to the required annual minimum salary thresholds for white-collar overtime exemptions under the FLSA.
While the DOL’s new rule does not implement any changes to the job duties tests for overtime exemptions, the minimum salary thresholds to be considered exempt under the FLSA will significantly increase from the current minimum of $684 per week, or $35,568 annualized. Specifically, effective July 1, 2024, the threshold will be raised to $844 per week, or $43,888 annualized. Effective January 1, 2025, the threshold will be raised to $1,128 per week, or $58,656 annualized. The minimum salary threshold for highly compensated employees under the FLSA will increase from $107,432 to $132,964 annually beginning July 1, 2024 and then to $151,164 annually beginning January 1, 2025.
The new final rule also puts in place a mechanism for continuing increases to the minimum salary threshold, beginning July 1, 2027, to be implemented every three years based on then current nationwide earnings data. The new final rule will expand overtime eligibility for millions of workers throughout the country in jurisdictions where applicable state or local law has not already increased the salary thresholds for exemptions from overtime compensation.
Employers should be preparing for compliance by evaluating their employee classifications and pay practices to understand potential adjustments needed before the new final rule takes effect on July 1, 2024.
Our Labor & Employment team is available to help employers navigate wage and hour compliance issues under the FLSA and related state and local regulations and guidance, and to provide counseling and assistance in addressing potential classification and reclassification issues as appropriate and needed.
Read more in our Client Alert below.
Contacts
- Jeffrey P. Englander Partner & Co-Chair, Labor & Employment
- jenglander@morrisoncohen.com
- Keith A. Markel Partner & Co-Chair, Labor & Employment
- kmarkel@morrisoncohen.com
- Cassandra N. Branch Associate
- cbranch@morrisoncohen.com
- Kayla West Associate
- kwest@morrisoncohen.com
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