28 Oct EFFECTIVE JANUARY 1, 2025, EMPLOYEES NOT PAID AN ANNUAL SALARY OF AT LEAST $58,656 WILL NO LONGER BE EXEMPT FROM OVERTIME PAY
As discussed in a previous MLLG Alert, the Department of Labor (“DOL”) issued a Final Rule on April 23, 2024, increasing the salary threshold an employer must pay an employee for the employee to qualify as exempt from overtime pay. Under the Fair Labor Standards Act (“FLSA”), employees who earn less than the salary threshold are non-exempt and, thus, eligible for overtime (with limited exceptions). Effective July 1, 2024, the Final Rule raised the salary threshold from $35,568 ($684 weekly) to $43,888 ($844 weekly). A second increase in the salary threshold goes into effect on January 1, 2025 (with future increases occurring every three years thereafter).
On January 1, 2025, the salary threshold increases to $58,656 annually ($1,128 weekly). Thus, as of January 1, 2025, unless a limited exception applies, any employee paid less than $58,656 annually on a salary basis will not qualify as exempt from overtime pay, and will be eligible for overtime pay for any hours worked over 40 in a workweek.
Although legal challenges to the Final Rule remain ongoing, employers no longer can afford to wait for the results. Instead, employers must begin taking steps to address the upcoming increase to the salary threshold. These steps include, but are not necessarily limited to: (1) identifying currently exempt employees who receive a salary of less than $58,656; (2) reviewing how many hours over 40 such employees currently work in an average workweek; (3) assessing one’s budget and compensation options; (4) putting policies in place limiting overtime; (5) reviewing job descriptions for exempt employees; and (6) developing a plan for communicating with employees about any changes in their status from exempt to non-exempt.
Masud Labor Law is ready to provide any necessary assistance in addressing the upcoming increase to the salary threshold and the legal implications the increase may have for your business. Indeed, depending on the actions taken, complying with the Final Rule does not necessarily require an employer to raise wages. Should you have any questions regarding various options for addressing the new salary threshold taking effect on January 1, 2025, or FLSA overtime requirements in general, please do not hesitate to contact us for assistance.