Understanding the New DOL Exempt Law: What Employers Need to Know
- amandaowens1024
- Jun 6, 2024
- 2 min read
Updated: Jul 7, 2024
On April 23, 2024, the U.S. Department of Labor introduced significant updates to the Fair Labor Standards Act (FLSA) regarding overtime exemptions, which will take effect on July 1, 2024. The FLSA overtime rule determines whether employees are eligible or exempt from overtime pay. Exempt employees, because of their rate of pay and the type of work that they do, are not eligible for overtime pay. In contrast, nonexempt employees must be paid time and a half for any hours they work over 40 in a workweek. Employers will need to understand how the changes to the federal overtime rule will impact their business.
One of the main recent revisions to the FLSA is an increase to the salary threshold for exempt employees. Two other key changes include a higher total annual compensation threshold for highly compensated employees and a procedure that will provide for timely updating of the earnings thresholds in the future. This new legislation is poised to impact millions of workers across various industries.
The pivotal changes in the new overtime rule include:
Increased Salary Threshold: The salary threshold increases to $43,888 on July 1, 2024, and increases again to $58,656 as of Jan. 1, 2025. Unless exempt, employees covered by the Fair Labor Standards Act must receive at least time and one-half of their regular pay rate for all hours worked over 40 in a workweek if their salaries are below these thresholds.
Increased Highly Compensated Employees (HCE) Threshold: The highly compensated employee total annual compensation threshold increases to $132,964 on July 1, 2024 and again to $151,164 as of January 1, 2025.
Automatic Updates: To ensure the thresholds keep pace with economic changes, starting July 1, 2027, the DOL will automatically increase the overtime threshold every three years.
It is important for employers to carefully review their compensation structures to comply with the new rule. Our team at PeopleWise HR is here to help organizations navigate this transition carefully. Contact us today to ensure a smooth implementation.
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