
In April 2024, we shared the U.S. Department of Labor’s (DOL) announcement of a new overtime rule under the Fair Labor Standards Act (FLSA), setting higher salary thresholds for white-collar exemptions, which first took effect on July 1, 2024. Now, as the second increase approaches, employers should prepare for the final phase of the rule, effective January 1, 2025, when salary levels will again rise for executive, administrative, and professional employees, as well as highly compensated employees.
What Are the New Salary Thresholds?
Starting January 1, 2025, employers will need to ensure that salaries meet the new DOL requirements to maintain overtime exemptions:
- Executive, Administrative, and Professional (EAP) Employees:
To qualify for the overtime exemption, EAP employees must now earn a minimum salary of $58,656 per year (or $1,128 per week).
- Highly Compensated Employees (HCE):
HCEs must earn at least $151,164 annually to maintain their exempt status under the new guidelines.
These changes aim to ensure fair compensation and proper classification for employees, helping prevent wage and hour violations.
Action Steps for Employers
While there may be challenges ahead, employers must take proactive steps to get ready for the rule’s implementation as scheduled. Here are some recommended actions:
- Evaluate Your Workforce and Classifications: Review exempt roles, including job responsibilities and salary levels, to determine how upcoming changes will affect your organization and identify any necessary adjustments.
- Seek Legal Guidance: Collaborate with your legal team to understand the new rule's implications and ensure compliance with state laws.
- Prepare for Changes: Develop strategies for potential reclassifications, including necessary training and clear communication plans to inform affected employees about changes to their status and compensation.
Final Thoughts
As you prepare for the upcoming changes in the DOL's overtime rule, take this opportunity to review and optimize your compensation practices. Ensuring that employee classifications and salaries align with the new thresholds will help safeguard your organization against compliance issues and promote a fair work environment for all employees.
If you need assistance or have questions, contact Simco!
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