It was announced last month that the US Department of Labor (DOL) will implement its new overtime rule which will raise the salary threshold on July 1, 2024 to $43,888 as well as another raise to $58,656 on January 1, 2024. This new rule will allow employers to revisit the pay of exempt employees. Sounds pretty exciting huh?
Well, this may cause some financial stress on employers depending on their approach. Keep in mind, those employees who fall under the FLSA exemptions for administrative, professional and executive do not qualify for overtime pay. They will still have to meet the certain duties test and paid at least the amount of the threshold.
Employers should start identifying their current exempt employees who make less than the new salary threshold that takes effect on July 1, 2024 and on January 1, 2025. Upon identifying those employees, employers will need to determine if they want to raise salaries and keep the employees exempt or reclassify their status to nonexempt.
This should not come as a surprise to any employee if proper communication has been established to those employees it will affect. Employees who are used to being exempt may have to start using the timeclock or timekeeping system that they never thought they would have to use. This may cause concern; however, the organization needs to start preparing now on how they will address any issues that may arise.
In addition, there will be an increase for the Highly Compensated Employees (HCEs) to $132,964 effective July 1, 2024 and $151,164 effective January 1, 2025.
More information can be found here: https://www.dol.gov/agencies/whd/overtime/rulemaking/salary-levels
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