Overtime Eligibility Final Rule Issued by Department of Labor
The United States Department of Labor (“DOL”) has issued a final rule revising the regulations under the Fair Labor Standards Act that provide exemptions from minimum wage and overtime pay for executive, administrative, professional, outside sales, and computer employees (“White Collar Employees”).
The first major changes are the salary threshold for a White-Collar Employee to be exempt from minimum wage and overtime rules.
- The current threshold is White-Collar Employees earning at least $35,568 are exempt.
- On July 1, 2024, that threshold increases to $43,888.
- On January 1, 2025, the threshold increases to $56,656.
- The threshold will then be recalculated on July 1, 2027, based on a DOL formula.
The second major change is what constitutes a Highly Compensated Employee under the same exemptions. This is important because if an employee is compensated at these levels, it is determinative that they are exempt from minimum wage and overtime pay regardless of their duties.
- The current threshold is employees earning at least $107,432 in total compensation.
- On July 1, 2024, that threshold increases to $132,964.
- On January 1, 2025, that threshold increases to $151,164.
- The threshold will then be recalculated on July 1, 2027, based on a DOL formula.
It is important for employers to understand that all of these amounts are annualized and will be prorated if an employee works for less than an entire year. It is also important to recognize that these amounts are based on total compensation, and not just wages.
As always, the attorneys at Gielow Groom Terpstra & McEvoy are available for a consultation to answer any questions you may have about this rule or other business and employment matters.
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