On April 23, 2024, the U.S. Department of Labor announced a Final Rule that updates and revises the regulations issued under section 13(a)(1) of the Fair Labor Standards Act, implementing exemptions from minimum wage and overtime pay requirements for salaried employees. We reported on this subject in September 2023 when proposed regulations were issued.
As expected, the Final Rule raises the minimum salary for employees who are paid on a salary basis and perform duties that qualify them to be exempt from the overtime requirements of the FLSA. This includes the employees classified under the traditional exemptions in the existing regulations as the Executive, Administrative, and Professional Exemptions (“EAP Employees”).
The new salary threshold will take effect in two steps. First, effective July 1, 2024, the Rule raises the salary threshold for EAP Employees to $43,888, a 23% increase over the current level. In January 2025, the Rule will increase the salary threshold for EAP Employees to $58,656. From there, the Rule contemplates automatic updates every three years based upon a new methodology to reflect current earnings data using the most recent available four quarters of data, as published by the Bureau of Labor Statistics(BLS), generally based upon a salary threshold at the 35th percentile of full-time non-hourly workers.
The Final Rule also increases the minimum salary for highly compensated employees (“HCE Employees”). On July 1, 2024, the salary threshold increases from $107,432 to $132,964 annually (a 23% increase). On January 1, 2025, it will rise to $151,164. After that, future increases will occur every three years and generally be based on the 85th percentile of all non-hourly workers nationwide.
We expect to provide updates in the coming weeks as more information regarding implementing the Final Rule becomes effective. If you have any questions, please contact Matt Stokely at mstokely@pselaw.com or Kristina Curry at kcurry@pselaw.com or call 937-223-1130.
