On April 23, 2024, the U.S. Department of Labor issued its final rule raising the salary thresholds that must be met in order to classify employees as “exempt” from overtime pay requirements under the Fair Labor Standards Act (FLSA). This final rule is set to take effect on July 1, 2024.

Executive, Administrative and Professional Exemptions: Under current regulations, to be considered exempt (i.e., not entitled to overtime pay) as an executive, administrative, or professional employee, the employer must pay the employee a salary of at least a $684/week ($35,568/year).

Under the new rule, the salary threshold increases as follows:

• $844/week ($43,888/year) on July 1, 2024;
• $1,128/ ($58,656/year) on January 1, 2025; and
• Additional increases every three years, beginning on July 1, 2027.

Highly Compensated Employee Exemption: The current salary threshold for the Highly Compensated Employee exemption is $107,432 annually (including at least $684 per week paid on a salary or fee basis).

Under the new rule, the salary threshold increases as follows:

• $132,964 (including at least $844 per week paid on a salary or fee basis) on July 1, 2024;
• $151,164 (including at least $1,128 per week paid on a salary or fee basis) on January 1, 2025; and
• Additional increases every three years, beginning on July 1, 2027.

Click here to view the USDOL’s page on the Final Rule.

It’s possible that a legal challenge could delay or prevent the final rule going into effect, but if not, on July 1, 2024, many employees who are currently considered exempt from overtime pay will become non-exempt (and therefore entitled to overtime pay) due to the increased salary thresholds.

Questions? Contact your Wessels Sherman Attorney to discuss what steps you should be taking proactively.