Department of Labor Increases Salary Threshold for Exempt Employees

Effective July 1, 2024, the Department of Labor has implemented important updates for exempt workers.

Those earning less than $43,888 annually, which breaks down to $844 per week, will now be eligible for overtime pay protections. This update aims to ensure more workers are fairly compensated for their extra hours. In addition to the update in July, starting January 1, 2025, the minimum salary threshold for exempt status will increase to $58,656 per year (equivalent to $1,128 per week).

For those considered highly compensated employees (HCE) exempt from overtime, the annual compensation requirement will rise from $107,432 to $132,964 starting July 1, 2024, and further increase to $151,164 annually on January 1, 2025. These adjustments reflect efforts to keep pace with changes in the economy and ensure employees are paid fairly for their work.

Looking ahead, starting July 1, 2027, the minimum salary thresholds for exempt status will be updated every three years based on current wage trends. To comply with the new regulations, employers should ensure that their overtime-exempt employees meet the salary thresholds by July 1, 2024, or consider reclassifying employees who no longer qualify. By remaining informed and proactive, employers can ensure compliance with regulations and equitable treatment of employees regarding overtime compensation.

References

U.S. Department of Labor. (n.d.). Earnings thresholds for the Executive, Administrative, and Professional exemption from minimum wage and overtime protections under the FLSA. Retrieved July 3, 2024, from https://www.dol.gov/agencies/whd/overtime/salary-levels

U.S. Department of Labor. (2024, April 23). Biden-Harris Administration finalizes rule to increase compensation thresholds for overtime eligibility, expanding protections for millions of workers. Retrieved July 3, 2024, from https://www.dol.gov/newsroom/releases/whd/whd20240423-0