Department of Labour (DOL) Increases Minimum Salary for Overtime Exempt Employees
The US Department of Labor (DOL) has increased the salary threshold for overtime exemption. In America, the Fair Labor Standards Act (FLSA) mandates employers to pay workers overtime for all hours worked beyond the standard 40-hour workweek.
However, not all employees qualify for overtime wages. According to the FLSA, exempt staff must be paid a specific weekly amount on a salary basis and perform administrative, executive, or professional duties in the workspace.
The act also excludes highly compensated employees (who earn salaries higher than the threshold for administrative, executive, and professional workers) from overtime pay. Based on the new DOL, more Americans will qualify for overtime wages.
Breaking Down the Updated DOL Minimum Salary for Exempt Employees
Under the current regulations for overtime pay, exempt employees must receive $684 per week – or $35,568 annually. Also, highly compensated staff members must earn an annual salary of $107,432.
However, the new rule increases these figures significantly. Interestingly, the DOL splits the latest salary thresholds into two phases. For exempt employees, the revised minimum salary is:
- $844 per week ($43,888 annually) on July 1, 2024;
- $1,128 per week ($58,656 annually) on January 1, 2025
The new annual salary for highly compensated employees, according to the DOL, is as follows:
- $132,964 on July 1, 2024
- $151,164 on January 1, 2025
The latest changes also include provisions to allow the Department of Labor to review the salary thresholds every three years using available salary data. According to the DOL, the new overtime salary rule will affect around one million employees in 2024 and three million workers in 2025.
What Do These Changes Mean for Employers?
The latest DOL rules mean US employers must evaluate their workforce to determine employees under the new non-exempt category. Reclassifying these individuals as non-exempt is one of the necessary actions to take to comply with the recent regulations.
However, this step will likely come with higher overtime costs. To avoid this scenario, business owners can increase the compensation of current exempt staff members to meet the new salary standards.
The period before the new rule comes into effect may also be the best time for employers to assess their timekeeping policies and ensure that work hours are accurately calculated for non-exempt workers.
Potential Legal Challenges
These current revisions aren’t a first-time occurrence in the United States. In 2016, the DOL tried to implement similar regulations, but it faced legal opposition from employers in the country. It’s quite likely that this new update to the overtime salary threshold will be subject to another legal battle.
While the American workforce waits to see what the new regulations will become, employers should ensure their processes are compliant in case the DOL rule stands.
Now would be the best time to hire an employment attorney to review your employee classification, timekeeping, and salary policies to align with the latest overtime threshold. At the Law Office of Sheri Oluyemi, our legal team has a vast understanding of US employment laws, and we can leverage this expertise to help position your company to comply with the DOL’s recent regulation. Reach out to us today to schedule a free teleconference consultation.
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