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DOL Raises Minimum Salary Threshold for Overtime Exemptions

On April 23, 2024, the Department of Labor (“DOL”) announced its final rule, significantly increasing the salary threshold required to qualify for overtime exemptions under the Fair Labor Standards Act (FLSA). This final rule which takes effect July 1, 2024, means millions of more workers will now be eligible for overtime pay.

Under the FLSA, certain employees are exempt from minimum wage and overtime requirements, including those employed in bona fide executive, administrative, or professional capacities. This exemption, referred to as the “EAP” exemption (also colloquially called the “White Collar” exemptions), applies when:

  1. The employee is paid a salary (salary basis test);
  2. The salary is not less than a minimum salary threshold amount (salary level test); and
  3. The employee primarily performs executive, administrative, or professional duties (duties test).

The new rule impacts the salary level test and notably does not impact the duties test. Moreover, the new rule takes effect in two stages. The first increase starts on July 1, 2024, raising the minimum weekly salary for exemption to $844 (equivalent to $43,888 annually). A more substantial increase comes on January 1, 2025, when the threshold jumps to $1,128 per week (equivalent to $58,656 annually).

Additionally, the minimum annual salary for the highly compensated employee exemption is also increasing, going from $107,432 to $132,964 on July 1, 2024, and then to $151,164 on January 1, 2025.

Finally, starting July 1, 2027, the salary thresholds will be updated every three years based on current wage data.

What This Means for You:

If you’re a salaried worker who makes less than the new thresholds and works more than 40 hours in a week, you’ll be eligible for overtime pay (usually time-and-a-half) for those extra hours.

Employers should review their current employee classifications and salary structures to ensure compliance with the updated FLSA regulations.