As we previously reported https://www.felhaber.com/changes-to-salary-basis-thresholds-may-be-coming-soon/, the U.S. Department of Labor previously published a proposed rule which would significantly change the salary threshold for exempt employees under the FLSA. Earlier today, the DOL published the final rule and it goes into effect on July 1, 2024.
The current salary threshold for executive, administrative, professional, computer, and outside sales employees is $684 per week ($35,568/year). Effective July 1, 2024, that figure will increase to $844 per week ($43,888/year). Then, on January 1, 2025, that figure will jump to $1,128 per week ($58,656/year). For highly compensated employees, the final rule requires an annual salary of $132,964 by July 1, 2024, which will increase to $151,164 on January 1, 2025. The final rule also includes a mechanism where all of these salary thresholds will automatically increase once every three years beginning on July 1, 2027.
This is a significant change to the FLSA exemption requirements and undoubtedly will result in more workers being classified as non-exempt and subject to overtime pay. Bloomberg law anticipates that the change may impact 3 to 4 million workers. While we expect lawsuits will be filed in an attempt to stop the final rule, the July 1 deadline is quickly approaching. All organizations should review their employee roster and determine which positions and employees will be affected by the updated salary threshold and plan accordingly. As always, Felhaber’s team of employment attorneys stands ready to speak with you about these changes and the impact on your organization.
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