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DOL Releases Final Rule Raising Salary Level for Overtime Pay

On the heels of its earlier proposal, on April 24, 2024, the United States Department of Labor (USDOL) released a Final Rule, which will take effect on July 1, 2024, raising the minimum salary threshold to qualify for certain overtime exemptions under federal law. Specifically, the Final Rule provides that on July 1, 2024, the salary threshold will increase to $844 a week (or $43,888 per year) and on January 1, 2025, the salary threshold will increase to $1,128 a week or ($58,656 per year).  Employees are exempt from the FLSA’s minimum wage and overtime protections if they are employed in a bona fide executive, administrative, or professional capacity. To fall within the EAP exemption, an employee generally must:

  • Be paid a salary (a predetermined and fixed amount that is not subject to reduction because of variations in the quality or quantity of work performed);
  • Be paid at least a specified weekly salary level; and
  • Primarily perform executive, administrative, or professional duties, as provided in the Department’s regulations.

Additionally, the salary threshold for highly compensated employees to be exempt will increase to $132,964 and to $151,164 on January 1, 2025.

The Final Rule also provides for future updates of these levels every three years to reflect current earnings.

In order to prepare for these changes, employers should consider if they are going to make any workforce changes such as raising the salary level of exempt employees to meet the new salary threshold or reclassifying employees to non-exempt status and eligibility for overtime. Further, employers should determine how they will notify employees of such changes.

The USDOL has released FAQs to aid in implementation.

This summary is for informational purposes only and is not intended to constitute legal advice. This information should not be reused without permission.