What You Need To Know
- Pay thresholds for exempt, salaried workers will increase on July 1 and January 1.
- Employers can take steps now to ensure compliance.
- Some state laws supersede the new rules or present additional considerations.
Effective July 1, 2024, the federal Fair Labor Standards Act salary threshold for exempt, white-collar employees will increase to $43,888 (or $844 per week). However, a bigger increase is in store for next year. On January 1, 2025, the salary threshold for these employees will increase to $58,656 (or $1,128 per week) as announced by the federal Department of Labor in Q2 of 2024. In order to be an exempt, salaried employee under the white-collar exemption, employees must be paid the above salary amounts, which are less than the salary amounts under some states’ laws (e.g., California and New York).
Next Steps
Employers can actively prepare for compliance by reviewing their payroll and deciding whether to increase employee salaries to retain their exempt status. As a reminder, in addition to making a minimum salary amount, exempt employees must also perform certain duties to be classified as exempt. For more information about employee classification, please see our Startup Guide to Hiring and Terminations.
