Department of Labor Releases Final Overtime Rule

How Does the DOL’s Rule Affect the Exempt Salary Threshold?

On April 23, 2024, the Department of Labor (DOL) released its final rule increasing the salary threshold level for exempt workers which will go into effect on July 1, 2024. The final rule includes significant changes to the Fair Labor Standards Act (FLSA) exemption requirements and will result in more workers being classified as non-exempt and eligible for overtime pay.

In order to be classified as exempt, employees must meet both the salary threshold and the duties tests. Under the final rule, on July 1, 2024, the annual salary threshold level for exempt workers will increase from $35,568, where it currently stands, to $43,888. It will increase again on Jan. 1, 2025, to $58,656.  Workers making less than this amount will need to be paid overtime when they work more than 40 hours in a week.

The highly compensated employee annual salary threshold level will increase on July 1, 2024, to $132,964, and on Jan. 1, 2025, it will increase again to $151,164.

Starting July 1, 2027, these annual salary threshold levels will automatically increase every three years.

Legal Challenges to Rule Expected

It is expected that lawsuits will be filed to challenge the DOL’s final rule increasing annual salary threshold levels under the FLSA. However, with the July 1 deadline fast approaching on the first salary threshold level increase, employers should review their employees’ compensation now to determine how this will impact their organization and plan accordingly.

GovDocs is monitoring further developments to this story.

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This Employment Law News blog is intended for market awareness only, it is not to be used for legal advice or counsel.