The U.S. Department of Labor (DOL) today announced its final rule increasing the salary threshold for the Executive, Administrative, Professional, Outside Sales, and Computer Employee minimum wage and overtime exemptions. The new threshold, effective July 1, 2024 will be $844 per week, and that threshold will increase again January 1, 2025 to $1,128 per week. Similarly, the floor for meeting the exemption for Highly Compensated Employees will rise to an annual rate of $132,964 on July 1, 2024 and will jump to $151,164 on January 1, 2025. The final rule creates a mechanism for continued updates of the earnings thresholds every three years.

Notably, meeting the compensation threshold in the DOL’s final rule is only one aspect of qualifying for the exemption. Along with meeting this salary level test, employers must also meet the salary basis test (i.e., employees must be paid on a salary basis – a fixed amount that is not subject to reduction because of variations in the quality or quantity of work performed) and the duties test (i.e., primarily performing executive, administrative, or professional duties). The DOL’s final rule does not change the salary basis test or the duties test required for the exemption.

The increased salary level thresholds identified in the DOL’s final rule stands to substantially increase the number of employees who will be entitled to overtime. Employers should therefore carefully examine the salary levels of their exempt employees to ensure that the new thresholds are met or that overtime is paid.

For more information, feel free to contact Jim Hanson, David Robinson, Jack Finklea, Don Vogel, Sari Pettinger, or Steve Stanaszak.