Key Takeaways

• Just yesterday, the U.S. DOL finally announced its long-awaited final rule amending the FLSA to increase the FLSA salary thresholds for overtime exemptions.
• The increases are significant and will take effect on July 1, with additional increases scheduled to take place on Jan. 1, 2025, and future updates planned every three years to reflect then-current earnings data.
• This will undoubtedly affect the exempt classifications of many employees, so employers should be sure to review the salaries of their exempt employees to ensure proper classification.

Just yesterday (April 23, 2024), the U.S. Department of Labor (DOL) finally announced its long-awaited final rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees, which amends the regulations at 29 CFR part 541 under the Fair Labor Standards Act (FLSA) and increases the FLSA salary thresholds for overtime exemptions.

The increases are significant and will take effect on July 1, which doesn’t give employers much time to come into compliance. Additional increases are scheduled to take place on January 1, 2025, with future updates planned every three years to reflect then-current earnings data.

In sum, the final rule makes the following changes:

• It increases the salary threshold for executive, administrative and professional employees and the total annual compensation requirement for highly compensated employees (HCEs).
  • On July 1, the salary threshold will equal $844 per week (or $43,888 per year) and the HCE total annual compensation requirement will be $132,964.
  • On January 1, 2025, the salary threshold will equal $1,128 per week (or $58,656 per year) and the HCE total annual compensation requirement will be $151,164.
• It adopts a mechanism to automatically update the earnings thresholds every three years.

Although some states already have higher salary thresholds for exempt employee status, many states simply follow the FLSA requirements, which will result in many employers scrambling to either increase their exempt employees’ salaries or reclassify their exempt employees as nonexempt.

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