Yesterday was a big day for issuing Final Rules: In addition to the FTC publishing its Final Rule on noncompetes (as earlier reported on PERKS), the US Department of Labor issued a Final Rule on overtime, providing that effective July 1, 2024, the minimum salary threshold for exempt status under the Fair Labor Standards Act will increase to $844 per week ($43,888 per year).
Under the Final Rule, the salary threshold will then increase to $1,128 per week ($58,656 per year) on Jan. 1, 2025. Starting July 1, 2027, salary thresholds will update every three years based on a formula using wage data to determine new salary minimum levels. In addition, the minimum threshold for the highly compensated employee except will increase on July 1, 2024, to $132,964 per, on January 1, 2025, to $151,164 per year, and as of July 1, 2027, will adjust every three years. Expect to see legal challenges to the Final Rule prior to its implementation.
Also remember: Exempt status is always determined by a two-part test:
- salary basis test; and
- the duties test. Paying an employee at least the minimum exempt salary does not, by itself, render an employee exempt from overtime pay. Employees still must also perform exempt duties.
In addition, while the Federal FLSA sets salary minimum floors applicable to all US employees, states, including New York and California, may set higher floors and may have different criteria to meet the duties test. Be sure to check the applicable salary minimum floor in the state(s) in which your employees work to determine if they are exempt from overtime pay.
Find the DOL’s Final Rule here: 2024-08038.pdf