On April 23, 2024, the U.S. Department of Labor (DOL) unveiled a new final rule that will significantly raise the minimum salaries that are eligible for white collar exemptions under the Fair Labor Standards Act (FLSA). This will affect both which employees will be entitled to overtime pay as well as employer compensation structures.
Keep reading as we will discuss key compliance considerations for your business regarding both the raised salary thresholds for white collar exemptions and other new overtime pay considerations and obligations under this final rule.
White Collar Rule
Under the FLSA, employees are entitled to overtime pay for all hours worked that exceed forty in one week, unless specifically exempted. Furthermore, there are three white collar exemptions: executive, administrative, and professional (EAP) as well as the “highly compensated employees” (HCE) exemption. The HCE exemption applies to those earning an annual salary of $107,432 or more who also perform at least one of the job duties listed under the EAP exemptions.
What is Changing with the Final Overtime Rule?
These are the following major changes taking place under the new final rule:
Initial Increase By July 1, 2024:
Raises the minimum weekly salary requirement from $684 to $844 per week ($43,888 annually) in order to qualify for one of the FLSA’s three white collar overtime exemptions.
Raises the salary threshold for the HCE exemption from $107,432 to $132,964.
Full Increase By January 5, 2025:
Raises the minimum weekly salary requirement again to $1,128 per week ($58,656 annually) in order to qualify for one of the FLSA’s three white collar overtime exemptions – this is more than a 50% increase.
Raises the salary threshold for the HCE exemption again to $151,164.
These new minimum thresholds will likely decrease the number of exempt employees overall, but potentially expand the type of employees who are entitled to overtime pay under the FLSA.
These minimum thresholds will now also update every three years based on up-to-date wage data, which will likely result in periodic increases.
How Can Premier HR Solutions Help?
Do you have questions about how this new final overtime rule will affect your business? Whether you need assistance with how you should adjust your current compensation structure or reclassify exempt employees, Premier HR Solutions is here for you. Schedule a call with one of our HR Advisors at the link below to conduct an overtime exemption audit on your exempt employees.
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