Margaret Gentzen, Attorney
Haley Spiewak, Law Clerk
Beginning as early as June 2024, employers can now expect a new Department of Labor (DOL) standard to take effect for overtime-exempt workers. The proposed overtime rule would increase the minimum salary threshold for exempt employees across all U.S. states and territories.
Currently, most salaried workers who are earning less than $35,568 annually (or $684 weekly) qualify for overtime pay. However, the DOL’s proposed rule seeks to increase the earning threshold for overtime eligibility to employees making less than $55,000 annually (or $1,059 weekly). This adjustment would affect the exempt status of approximately 3.4 million U.S. employees.
Furthermore, the DOL rule would increase the minimum salary application of the highly compensated employee exemption from $107,432 to $143,988. Additionally, the rule introduces a mechanism to automatically update the salary earnings threshold every three years.
What can employers expect?
- Employers of overtime-exempt employees who would make less than the new minimum salary threshold will need to re-classify their employees or adjust their salaries to meet the threshold.
- Employers should continue to pay their exempt employees on a salary basis, as it remains a requirement for exempt classification.
- Moreover, employers in states where the thresholds exceed the new projected DOL rule must adhere to the minimum thresholds to comply with applicable state law.
The DOL is expected to finalize the rule by April 2024, and if passed, employers can expect the rule to take effect as early as June of 2024.
If you are an employer that has more questions about the proposed overtime rule, contact Fox Smith at 314-588-7000.