The U.S. Department of Labor (“DOL”) has announced increases for the salary thresholds for exempt workers under the Fair Labor Standards Act (“FLSA”).
- Effective July 1, 2024, the annual salary threshold for exempt executive, administrative, or professional employees will increase from its current $35,568 to $43,888 (or $844 per week). The annual salary threshold for exempt highly compensated employees will also increase from $107,432 to $132,964.
- Effective January 1, 2025, the annual salary threshold for exempt executive, administrative, or professional employees will further increase from $43,888 to $58,656 (or $1,128 per week). The annual salary threshold for highly compensated employees will also increase from $132,964 to $151,164.
- Beginning July 1, 2027, and every 3 years thereafter, the salary thresholds will be updated to reflect current earnings data. The updated salary thresholds will be posted in the federal register at least 150 days before they take effect.
Under the FLSA, employees must meet the above salary thresholds and the duties tests for executive, administrative, or professional employees for the employees to be exempt from the FLSA’s overtime pay requirements. Employees may also qualify as exempt if they meet the above salary threshold for highly compensated employees and the related duties test. If an employee does not qualify as exempt, the employee must be paid time a half for any hours worked over 40 hours in a workweek.
While the new thresholds are likely to be challenged in court, employers should still prepare to either (1) raise affected employees’ salaries to the new exemption thresholds or (2) pay these individuals overtime pay. For employees who will now be non-exempt and entitled to overtime pay, employers will need to carefully notify them of their new FLSA status and of any procedures applicable to non-exempt employees, such as clock-in/clock-out procedures, to ensure that any overtime is being captured.
If you have any questions about the new salary thresholds, or how this will apply to your workplace, please contact Katie Busbee or a member of our employment law team.