As we previously discussed, the U.S. Department of Labor (DOL) released its new rule that was estimated to make approximately 4 million more employees across the United States eligible for overtime. While we anticipated that litigation might slow or halt the implementation of this rule, that has not been the case. As of today, employers should immediately make plans for the new rule’s phase one, which is effective July 1.
Employees are either exempt or non-exempt from overtime under the Fair Labor Standards Act (FLSA). In order to be exempt from overtime pay, the employee must have certain job duties and be compensated on a salary basis that meets the minimum salary threshold set by the DOL. The new rule substantially increased the salary thresholds for some of the most popular exemptions making many more employees eligible for overtime.
Under the current regulations, the salary threshold for exempt employees is $684 a week ($35,568 per year). The new rule increases the threshold in two phases.
- On July 1, 2024, the salary threshold will increase to $844 a week ($43,888 per year).
- On January 1, 2025, the salary threshold will increase to $1,128 a week ($58,656 per year).
In addition, the salary level required to claim the "highly compensated employee" exemption will increase to $132,964 on July 1, and $151,164 on January 1, 2025.
What Steps Companies Can Take Now
If your company has employees that are no longer at or above that salary threshold, and the company is not going to make any salary adjustments, then the company needs to start tracking those employees’ hours and compensating them at time and a half of their regular rate of pay for all hours worked in excess of 40 hours per workweek.
There are other options available to employers, but those options need to be considered now ahead of the July 1 deadline.
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