DOL Finalizes Rule Increasing Salary Requirements for Overtime Exempt Employees

The U.S. Department of Labor announced its anticipated Final Rule increasing the salary threshold level needed for employees to be exempt from overtime requirements under the Fair Labor Standards Act.

Under this new Rule, a worker must earn at least $43,888 beginning on July 1, 2024 to satisfy the salary basis test for overtime exemption. This amount will increase to $58,658 beginning on January 1, 2025. Employees must also continue to satisfy all other existing requirements, including the duties tests for the executive, professional, or administrative exemptions.

This Rule also increases the salary requirements for Highly Compensated Employees (HCE) who normally need to only satisfy some of the duties tests to qualify for overtime exemption. The threshold to qualify as an HCE will increase to $132,964 on July 1, 2024 and then to $151,164 on January 1, 2025. The Rule is subject to an automatic adjustment in 2027 and then every three years thereafter based on a DOL formula.

Although this Rule will likely be subject to legal challenge, employers should analyze their wage and hour classifications to determine whether overtime exempt employees will continue to satisfy the applicable tests moving forward.