U.S. DOL Increases Salary Threshold in New Federal Overtime Rule

The U.S. Department of Labor (DOL) recently announced an increase to the Fair Labor Standards Act’s (FLSA) annual salary-level threshold from $35,568 to $58,656 for white-collar exemptions to overtime requirements.

Effective July 1, 2024, the salary threshold will increase to $43,888 ($844 per week).  The next increase, to $58,656 ($1,128 per week), takes effect January 1, 2025.  Starting July 1, 2027, the DOL will also automatically increase the overtime threshold every three years.

To be exempt from overtime under the FLSA’s “white collar” executive, administrative and professional exemptions—called white-collar exemptions—employees must be paid a salary of at least the threshold amount and meet certain “duties” tests.  If they are paid less than the threshold amount or do not meet the tests, they must be paid 1 1/2 times their regular hourly rate for hours worked in excess of 40 in a workweek.

Next Steps

Employers will need to decide whether to raise the salaries of those employees who earn above the current overtime threshold but will earn below it under the new standard so that they remain exempt.  Employers that choose not to increase these employees’ salaries should be prepared to pay overtime to these employees when they work more than 40 hours in a workweek.

For more information, contact a member of Dunn Carney’s Employment Law Team.