United States Department of Labor Issues Final Overtime Rule Raising Salary Basis Threshold

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On April 23, 2024, the United States Department of Labor (“DOL”) issued its long awaited final overtime rule (the “Rule”), which updates and revises the regulations addressing the salary threshold applicable to the “white collar” exemptions under the Fair Labor Standards Act (“FLSA”).

The Rule raises the salary basis threshold for the “white collar” exemptions (executive, professional and administrative) from $35,568/year ($684/week) to $43,888/year ($844/week) on July 1, 2024 and then to $58,656 annually ($1,128/week) on January 1, 2025. Employers are reminded that in order to qualify for the white collar exemptions, employees must be paid on a salary or fee basis (subject only to certain limited exceptions) and perform certain qualifying duties (the “duties test”). The salary basis threshold must be met in addition to the salary and  duties tests. The salary basis will update every three years based on wage data. The Rule does not impose any changes on the salary basis or job duties aspects of the exemptions.

As for “highly compensated” employees, the Rule raises the annual salary threshold from $107,432 to $132,964 (including at least $844/week on a salary or fee basis) and in January 1, 2025 to $151,164 (including at least $1,128/week on a salary or fee basis). As with the salary basis, this threshold will also increase every three years based on wage data.

The Rule goes into effect on July 1, 2024.

Currently, there are two lawsuits already filed, one by the U.S. Chamber of Commerce, all seeking to prevent the rule from taking effect. Employers are advised to prepare for implementation of the salary basis increases but keep abreast of any legal developments.

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