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DOL Increases Salary Level for Exempt Employees (coming July 1, 2024)

Last week, the U.S. Department of Labor (DOL) issued its much-anticipated final rule raising the salary threshold for employees to be exempt from federal overtime requirements under the Fair Labor Standards Act (FLSA). The new rule significantly increases the minimum salary requirement for executive, professional, and administrative employees, and the salary change started July 1, 2024. According to the Biden-Harris Administration, the new rule will ensure “fair pay for long hours” for salaried workers. Read the DOL press release. All employers need to review this new rule and its potential impact on employee compensation.

The new rule increases the minimum salary threshold, to $844 per week or $43,888 per year (current level is $638/week) as of July 1, 2024. The next increase, scheduled for January 1, 2025, will raise the threshold to $1,128 per week ($58,656 per year). Going forward, the salary level will automatically increase every three (3) years. The “highly compensated employee” overtime exemption salary threshold will increase from $107,432 to $132,964 on July 1, 2024, and on January 1, 2025, it will bump up to $151,164.

The new rule does not make any changes to the duties tests for the various white-collar or highly compensated employee exemptions, which also must be satisfied for an employee to be properly classified as exempt from overtime. Read more about the DOL duty tests.

The experts predict that the new rule may be blocked or delayed due to legal challenges, so employers should hold off making any immediate changes due to the new rule. This major increase is similar to the changes proposed by the Obama Administration which were successfully blocked in 2016.

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