In late April, the U.S. Department of Labor (DOL) released its final rule significantly raising the minimum-salary threshold to qualify for overtime exemptions under the Fair Labor Standards Act (FLS).  

Starting July 1, 2024, the minimum salary for exemption from overtime as an executive, administrative, or professional employee (EAP), will increase from $684 per week ($35,568 annually) to $844 per week ($43,888 annually). On January 1, 2025, this threshold will increase to $1,128 per week ($58,656 annually). The rule also raises the minimum total annual compensation level for exemption as a “highly compensated employee” from $107,432 to $132,964 effective July 1, 2024, and to $151,164 effective January 1, 2025. The final rule also includes a three-year automatic adjustment mechanism to update the salary threshold starting July 1, 2027. 

If the final rule withstands any legal challenges, the impact of the changes is significant. According to DOL projections, the 2025 increase would mean three million workers will lose their exempt status and become entitled to overtime pay unless employers raise wages to meet the new standards or reclassify positions.   

To learn more about the new requirements, register for one of two online seminars offered by the DOL.