DOL issues final rule on salary level increase for FLSA exemptions

On April 23, 2024, the U.S. Department of Labor (DOL) announced a final rule that will raise the salary threshold required to classify employees as exempt from overtime pay requirements under federal law. Effective July 1, 2024, the salary threshold will increase from the current level of $684 per week ($35,568 per year) to $844 per week ($43,888 per year). Then, on January 1, 2025, the salary threshold will increase to $1,128 per week ($58,656 per year). These changes will result in a 65% overall increase in the salary threshold for overtime exemptions.

Background

The federal Fair Labor Standards Act (FLSA) requires covered employers to keep accurate records of employee work time, pay employees at least the $7.25-per-hour minimum wage, and pay overtime of at least 1.5 times employees’ regular hourly rates if they work more than 40 hours in a seven-day workweek.

However, there are exceptions, called “exemptions.” For instance, under Section 13(a)(1) of the FLSA, “any employee employed in a bona fide executive, administrative, or professional capacity” is exempted from the timekeeping, minimum wage, and overtime pay requirements of the statute.