This blog was written by Brandon White, Director of HR at Helpside.

On April 23, 2024, the U.S. Department of Labor (DOL) issued a final rule amending the criteria for white-collar employees to qualify for overtime exemption under the Fair Labor Standards Act (FLSA). The final rule will take effect on July 1, 2024. Employers should evaluate impacted employees now and make decisions to comply with the new rule.

Who qualifies?

The Fair Labor Standards Act (FLSA) exempts certain white-collar workers from overtime pay requirements. These include individuals in executive, administrative, professional, and certain sales and computer-related roles. Additionally, some highly compensated employees may also be exempt.

To meet the exemption criteria, these employees need to pass the standard salary level test, which sets a minimum wage threshold they must earn.

Salary increases

Starting July 1, 2024, the DOL’s final rule will increase the minimum salary level for exemption from FLSA from $684 to $844 per week which is $35,568 to $43,888 per year.

Then, starting January 1, 2025, the salary level will increase the minimum salary level for exemption from FLSA from $844 to $1,128 per week which is $43,888 to $58,656 per year.

Beginning July 1, 2027, the DOL will automatically update the minimum salary level every three years.

Legal challenges

Due to the history of similar DOL rule changes, we anticipate there will be many legal challenges this rule will face prior to the July 1st effective date. We anticipate that lawsuits will be filed challenging this rule similar to the rule filed in 2016. Some groups have questioned whether or not the DOL has the authority to do this in accordance with the Administrative Procedures Act and whether or not it changes can focus on salary levels or only the duties tests for exemptions.

How should employers respond to these new changes?

With this impending rule, it is a good time to review each exempt employee’s position and determine if they continue to qualify for exemption from the FLSA. Begin by examining the duties test portion of the exemption to and evaluate the strength of that exemption. Remember, if a claim is filed, you as the employer are responsible for defending the position as exempt from overtime. If you have questions about overtime exemption, please feel free to reach out to the Helpside HR team at 801-443-1090 or humanresources@helpside.com.

For the exempt employees who are affected by the increased earnings threshold, employers can do any of the following:

  • Increase the employee’s annual salary to at least $43,888.
  • Change the employee from exempt to non-exempt from overtime and begin tracking employee hours and paying overtime.
  • Clients of Helpside can contact Helpside HR to review other possible options.

Employers should take note of this final rule to ensure compliance with updated federal regulations. Also keep in mind that some states have additional requirements for overtime exemptions with salary thresholds that may be higher than this new rule. In the case of conflicting salary threshold, the higher threshold must be followed. If there are any questions regarding this new federal salary threshold for overtime exemption, reach out to us at 801-443-1090 or humanresources@helpside.com.