On April 23, 2024, the U.S. Department of Labor (Department) announced a final rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, which will take effect on July 1, 2024. The final rule updates and revises the regulations issued under section 13(a)(1) of the Fair Labor Standards Act implementing the exemption from minimum wage and overtime pay requirements for executive, administrative and professional (EAP) employees.
Currently, only employees meeting job title criteria and making $35,568 per year are eligible for overtime compensation.
As of July 1, 2024, the threshold increases to $43,888 per year.
As of January 1, 2025, the threshold increases again to $58,656 per year.
Starting July 1, 2027, this threshold will update every three years based on current wage data.
The Biden-Harris Administration states this is to equalize the benefit of overtime work for employees as well as the current benefit provided to employers. This is part of an ongoing endeavor to raise the bar for workers and lay the foundation for economic prosperity.
Per Wage and Hour Administrator Jessica Looman, key provisions of the final rule include the following:
- Expanding overtime protections to lower-paid salaried workers.
- Giving more workers pay or valuable time back with their family: By better identifying which employees are executive, administrative or professional employees who should be overtime exempt, the final rule ensures that those employees who are not exempt receive time-and-a-half pay when working more than 40 hours in a week or gain more time with their families.
- Providing for regular updates to ensure predictability. The rule establishes regular updates to the salary thresholds every three years to reflect changes in earnings. This protects future erosion of overtime protections so that they do not become less effective over time.
If you would like additional information or have any questions, please contact Heather Smelley at [email protected] or 312.670.7444. Visit ORBA.com to learn more about our Employee Benefit Plans Services.
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“Interesting update! As a lawyer, this change in overtime rules is definitely something businesses need to be aware of. It’s a significant bump in the salary threshold, which means many more employees could become eligible for overtime pay come July 1st. From a legal standpoint, it’s crucial for companies to review their classifications of exempt employees to ensure they’re still accurate under the new rules. Misclassifying employees can lead to some serious legal headaches and potential back pay liabilities. On the flip side, for employees, this could mean a nice boost in their paychecks or more time off to spend with family.”