The U.S. Department of Labor has updated and revised the regulations issued under the Fair Labor Standards Act (FLSA) implementing the exemptions from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees. The changes are estimated to impact up to 4 million salaried workers, who will now qualify for overtime pay.
Significant revisions include increasing the standard salary level, increasing the highly compensated employee total annual compensation threshold, and adding to the regulations a mechanism that will allow for the timely and efficient updating of the salary and compensation thresholds, including an initial update on July 1, 2024, to reflect earnings growth.
Under current rules, set by the Trump administration, salaried workers earning more than $35,500 per year were exempt from overtime pay. This threshold will increase in steps, with the threshold increasing to $43,888 on July 1, 2024. It will then increase to include workers who earn less than $58,656 on January 1, 2025.
Salaried workers in senior executive or management positions are generally exempt, as are most workers who earn more than $107,000.
The Department is not finalizing in this rule its proposal to apply the standard salary level to the U.S. territories subject to the Federal minimum wage and to update the special salary levels for American Samoa and the motion picture industry.
The FLSA requires covered employers to pay employees a minimum wage and, for employees who work more than 40 hours in a week, overtime premium pay of at least 1.5 times the employee’s regular rate of pay. Section 13(a)(1) of the FLSA, which was included in the original Act in 1938, exempts from the minimum wage and overtime pay requirements “any employee employed in a bona fide executive, administrative, or professional capacity.” The exemption is commonly referred to as the “white-collar” or executive, administrative, or professional (EAP) exemption.
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Tags: Payroll
