The Department of Labor (DOL) has released its final rule increasing the minimum salary employers must pay to most exempt workers under the Fair Labor Standards Act (FLSA).
As of July 1, 2024, exempt executive, administrative and professional employees are required to be paid a minimum salary of $844 per week (or $43,888 per year); that amount rises again on January 1, 2025 to $1,128 per week or $58,656 per year.
These amounts track with the 35th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region.
For highly compensated individuals, the minimum salary will reach $132,964 on July 1, 2024 and jump to $151,164 annually as of January 1, 2025, following the annualized weekly earnings of the 85th percentile of full-time salaried workers nationally.
Two years later, on January 1, 2027—and every three years after—the thresholds will be adjusted to reflect current earnings data.
The DOL estimated that the final rule will impose approximately $1.4 billion of direct costs on employers in the first year, with roughly three million workers newly entitled to overtime protection under the FLSA and about 248,000 workers who will become eligible for overtime when the highly compensated employee level is increased.
As with previous attempts by the DOL to increase salary thresholds, such as the effort in 2016, the rule is expected to be challenged.
To read the final rule, click here.
Why it matters
Employers should take the opportunity to conduct a salary review of employees to determine which qualify under the executive, administrative and professional exemptions and ensure proper classification before July 1.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.