Employment Law Update: Department of Labor Increases Salary Threshold for Overtime Exemptions

On April 23, 2024, the Department of Labor announced a final rule increasing the salary threshold for the overtime exemption of administrative, executive, and professional employees. Beginning on July 1, 2024, the salary threshold will increase from $35,568 to $43,888 per year. The threshold will again increase to $58,656 per year on January 1, 2025. The DOL plans to review these thresholds in 2027 and every three years thereafter to determine additional increases.

The highly compensated employee threshold for overtime exemption is also increasing from $107,432 to $132,964 after July 1, 2024 and $151,164 after January 1, 2025.

Assuming the rule passes constitutional muster, employers who pay salaries below the prescribed thresholds may find themselves liable for overtime, additional damages, and attorney fees if the employee works over 40 hours in a week, even if the employee would otherwise be considered exempt from the overtime requirements. To protect against this, employers should engage competent legal professionals to audit their time records, job duties, and salary levels to ensure compliance with the new rule before January 1, 2025.

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