Exempt Salary Thresholds Above the FLSA

Update: 2024 Changes to the FLSA Exempt Salary Threshold

On July 1, 2024, the Department of Labor (DOL) issued a final rule raising the minimum salary for employees to be considered exempt under the executive, administrative, or professional categories to $43,888 annually, with a further increase to $58,656 set for January 1, 2025. 

In addition, the threshold for highly compensated employees (HCEs) was raised to $132,964, with another increase to $151,164 by 2025. Employers have now had to reassess employee classifications, adjust salaries, and ensure proper overtime compensation for their newly non-exempt employees.

As was generally expected, there have been several legal challenges to the ruling. You can learn more about them here.

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*Please note that some of these figures may now be out of date following the 2024 updates.

Exempt Salary Thresholds Above the FLSA

While the Fair Labor Standards Act sets a federal threshold for salaried (exempt) employees, several states have their own regulations.

As a reminder, under the (FLSA), all employees must be paid at least minimum wage plus overtime for all hours worked. However, the FLSA provides an exemption from minimum wage and overtime pay for employees who work as executive, administrative, professional and outside sales employees.

To qualify for the exemption, employees must meet certain tests regarding their job duties and be paid on a salary basis of not less than $684 per week ($35,568 annually).

Below are the jurisdictions with laws that require exempt employees to have a salary basis above the FLSA threshold to be considered exempt employees as of Jan. 1, 2023.

Alaska

Starting with Alaska, exempt employees must be paid two times the state minimum wage for the first 40 hours worked each week, excluding board or lodging from the employer.

• $45,136 annually ($868.00 per week)

California

California, meanwhile, also stipulates that exempt employees must earn a monthly salary equivalent to no less than two times the state minimum wage for full-time employment.

But the state has two separate levels for large (26 or more employees) and small employers, as well as for workers in computer software.

Large

• $64,480 annually ($5,373.33 monthly)

Small

• $64,480 annually ($5,373.33 monthly)

Computer Software Employees

Such employees who meet the duties requirements must be paid a salary of at least $112,065.20 annually or $53.80 per hour to be considered exempt.

Colorado

Colorado’s salary requirements for exemption status are:

• $50,000 per year ($961.54 per week)
• If highly technical computer professionals are paid on an hourly basis and meet the duties requirements, they must be paid at least $31.41 per hour

It’s also worth noting that Colorado’s standard threshold will increase in 2024, with an indexed increase slated for 2025.

Maine

In Maine, an exempt employee’s regular annual compensation must exceed 3,000 times the state’s minimum hourly wage or federal rate (whichever is higher)

Effective Jan. 1, 2023, that makes it:

• $41,401 annually ($796.17 per week)

New York City and Nearby Counties

New York City’s alary requirements for exempt employees is:

• $58,500 annually ($1,125 per week)

That’s also the threshold in Nassau, Suffolk, Westchester Counties, counties, N.Y.

Remainder of New York State

For other places in New York State, effective Dec. 31, 2022, it’s:

• $55,341 annually ($1,064.25 per week)

Washington

Washington State also updated its requirements Jan. 1, 2023. It follows a similar method to California.

Small Businesses

• $57,293.60 annually ($1,101.80/week); salaried workers must be paid at least 1.75 times the state’s minimum wage)

Large Businesses

• $65,478.40 annually ($1,259.20/week); salaried workers must be paid at least two times the state’s minimum wage

Lastly, if computer professionals in Washington are paid on an hourly basis and meet the duties requirements, they must be paid at least $55.09 per hour to be considered exempt (3.5 times the state’s minimum wage).

FLSA Exemption Test

As mentioned above, to qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis.

The U.S. Department of Labor outlines the categories and the tests that must be met under the federal FLSA. Find more information from the DOL’s Wage and Hour Division, which includes exempt salary information on:

• Executives
• Administrative workers
• Professionals
• Computer employees
• Outside sales workers
• Highly compensated employees
• Blue-collar workers
• Police, firefighters, paramedics and other first responders

Conclusion

Employers that operate across the U.S. have plenty of wage and hour issues to monitor. And exempt salary thresholds are part of that complex matrix.

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