News
The Laws, They Are a Changing, Part II: Increased Minimum Salary Requirements Begin July 1, 2024
The Department of Labor, Wage and Hour Division (“DOL”), recently released its final rule titled, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees (“Final Rule”).
The Final Rule increases the minimum salary that an employee must be paid to qualify for an exemption from the Fair Labor Standards Act’s (“FLSA”) overtime and/or minimum wage requirements. Employers should remember, however, that an employee who is classified as exempt, must meet both the minimum salary threshold and the applicable duties test. If an employee fails to meet both criteria, then the employee must be paid at least minimum wage and receive overtime pay for all hours worked over 40 in a workweek.
The first minimum salary increase takes effect on July 1, 2024, with an additional increase occurring on January 1, 2025. The increased minimum salary requirements set forth by the DOL for the most common exemptions are as follows:
|
Exemption |
Current Minimum Salary Amount |
Minimum Salary Amount Beginning July 1, 2024 |
Minimum Salary Amount Beginning January 1, 2025 |
|
Executive, Administrative or Professional |
$684 per week (equivalent to a $35,568 annual salary) |
$844 per week (equivalent to a $43,888 annual salary) |
$1,128 per week (equivalent to a $58,656 annual salary) |
|
Highly Compensated Employee |
$107,432 per year, including at least $684 per week paid on a salary or fee basis |
$132,964 per year, including at least $844 per week paid on a salary or fee basis |
$151,164 per year, including at least $1,128 per week paid on a salary or fee basis |
|
Computer Employees Paid on an Hourly Basis |
$27.63 per hour |
$27.63 per hour |
$27.63 per hour |
These increased earning thresholds do not apply to certain types of employees, including practicing medical doctors, practicing lawyers, bona fide teachers, and outside sales employees.
While it is possible that a legal challenge could be made to this Final Rule, it is unlikely that a court would stay the Final Rule in its entirety prior to July 1, 2024. Therefore, it is imperative that employers conduct an audit of all employees classified as exempt to ensure compliance with the Final Rule and other federal regulations outlining the essential duties that an employee must perform to qualify for the exemption.
If a salaried exempt employee is currently paid less than $844 per week, their employer must determine prior to July 1st whether the employer will increase the employee’s salary to match the increased minimum salary threshold or convert the employee to non-exempt status. We also suggest that any employee who is reclassified as non-exempt receive training on timekeeping policies and procedures to minimize any alleged claims of unpaid overtime.
We are always available to answer any of your FLSA questions and to help you identify positions that may be at risk of misclassification. In order to ensure that you receive the most current announcements and information, please keep us updated as to any changes to your company contacts or email addresses.
THIS ARTICLE IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND SHOULD NOT BE CONSIDERED LEGAL ADVICE. LEGAL ADVICE CANNOT BE GIVEN WITHOUT INFORMATION ABOUT YOUR SPECIFIC SITUATION.