Labor & Employment News Alert
Department of Labor Issues Final Rule Increasing Salary Threshold for Overtime Exemptions
April 24, 2024
By: Jill E. Hall
On April 23, 2024, the Department of Labor issued a final rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees.” The rule significantly raises the minimum salary thresholds to qualify for certain exemptions from overtime pay under the Fair Labor Standards Act (FLSA). Specifically, the rule will raise the minimum weekly salary to qualify for one of the FLSA’s three white-collar overtime exemptions (executive, administrative, and professional employees) to $1,128 per week - the equivalent of a $58,656 annual salary - by January 1, 2025.
The salary threshold increase will come in two phases:
- On July 1, 2024, the threshold will rise to $844 per week ($43,888 annualized)
- On Jan. 1, 2025, the threshold will rise further to $1,128 per week ($58,656 annualized)
The rule will further raise the annualized salary threshold for the exemption for “highly compensated employees” from $107,432 to $151,164. That increase also will come in two phases:
- On July 1, 2024, the threshold will rise to $132,964 per year
- On Jan. 1, 2025, the threshold will rise further to $151,164 per year
These salary thresholds will be adjusted every three years based on salary data, with the first increase coming in July 2027.
The final rule does not impact the job duties portion of the exemption requirements. Those employees currently classified as exempt whose salaries do not meet the minimum thresholds set forth under the rule will no longer satisfy the exemption and should be reclassified as nonexempt employees entitled to overtime pay. Alternatively, employers may choose to raise the pay of such employees so that they continue to satisfy the applicable exemption.