Effective July 1, 2024, the salary threshold increased to the equivalent of an annual salary of $43,888 (it was $684 per week or $35,578 per year).
- The new minimum exempt-salary amount is now $43,888.
- On Jan. 1, 2025, the rule’s new methodology takes effect, resulting in the additional increase to $58,656.
- In addition, the rule will adjust the threshold for highly compensated employees.
- Starting July 1, 2027, salary thresholds will update every three years, by applying up-to-date wage data to determine new salary levels.
Of course, there are lawsuits galore so we shall see if any of this is changes but for now it is full steam ahead (except if you are the “State of Texas” as an employer, effective July 2024)
Key provisions of the final rule include the following:
- Expanding overtime protections to lower-paid salaried workers.
- Giving more workers pay or valuable time back with their family: By better identifying which employees are executive, administrative or professional employees who should be overtime exempt, the final rule ensures that those employees who are not exempt receive time-and-a-half pay when working more than 40 hours in a week or gain more time with their families.
- Providing for regular updates to ensure predictability. The rule establishes regular updates to the salary thresholds every three years to reflect changes in earnings. This protects future erosion of overtime protections so that they do not become less effective over time.
Free Resources
This link below gives a really great overview of the changes.
https://www.dol.gov/agencies/whd/overtime/salary-levels
The official Final Rule can be found here.
- If you have any salaried employees, you must change their compensation to be at least $43,888 as of July 1st 2024 (retro-pay if you missed this deadline), then to $58,656 on January 1st 2025.
- What is the other option? Change your salaried employees to hourly, and appropriate overtime pay for any hours worked over 40 hours in a 7 day period.
- Or you can change them to “non-exempt salaried” and pay them the required state/ federal hourly minimum wage equivalent amount. This generally requires a regular weekly salary (7 day period) with no docking allowed! Of course there are exceptions, which is why this option can get complicated.
- Just be consistent with same/ similar roles – they really should have the same status (hourly or salaried) to avoid claims of discrimination.
Please let me know if you need any help with this change and/or a compensation analysis.
Simply send an email to . Feel free to connect on LinkedIn.