Several weeks ago, the U.S. Department of Labor (DOL announced a final rule which took effect on July 1, 2024.  The rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees,” revises the Fair Labor Standards Act (FLSA) regarding minimum wage salary and overtime pay requirements for executive, administrative, or professional (EAP) employees.

Overtime regulations were initially introduced to protect working citizens from exploitation.   They require that covered employers pay employees a minimum wage and overtime pay for any time worked exceeding 40 hours in a week of at least 1.5 times the employee’s regular rate of pay.  EAP employees are an exception to this rule so long as the employer can establish the applicability of the exemption in accordance with specific defined terms set by the Secretary of Labor.

Therefore, with the new rule, though an employee’s particular job requirements will also assist in determining whether an EAP exemption applies, the DOL has implemented long overdue increases of the compensation thresholds associated classification as a standard or EAP employee:

• As of July 1, salaried workers who earn less than $844 per week may be eligible for overtime pay and the salary threshold to be classified as an EAP shall be set at $132,964.
• As of January 1, 2025, salaried workers who earn less than $1,128 weekly ($58,656 annually), may be eligible for overtime pay and the salary threshold to be classified as an EAP shall increase to $151,164.

Also, in recognition that regular updates to earning thresholds are necessary, the new rule requires that the DOL updates salary thresholds every three years to keep pace with changes in employee pay and remain useful in helping determine exemption status.  Therefore, employers can expect the next update to the standard salary level and EAP threshold to begin on July 1, 2027.

(This blog, prepared by Campanella Law Office, is for general informational purposes only and is not intended to convey specific legal advice, nor is it intended to create or constitute an attorney-client relationship.)