New Overtime Rule Raises Salary Minimum for Exempt Employees

In its new overtime rule released on April 23, 2024, the U.S. Department of Labor raised the salary basis for certain overtime exemptions from the current exempt salary threshold of $35,568 per year (or $684 per week) to $43,888 per year (or $844 per week).  The rule is set to take effect July 1, 2024, and the salary minimum is set to increase again to $58,656 in January 2025.  The rule stands to impact employees that are currently classified as exempt under the administrative, executive, and professional exemptions. 

Employers should take action:

• If an employee is not being paid this salary, the employee’s salary must be raised, or the employee will need to be classified as non-exempt making the employee eligible for overtime. 

• Employers will also be required to record and maintain hours worked records for any reclassified employees. 

The rule also provides an increase in the exempt salary threshold under the highly compensated employee exemption.  It is advisable that employers start planning for the change by reviewing salaries of exempt employees and classification decisions, but the timing for making the changes should be evaluated as legal challenges to the new rule are expected and those challenges could stop or postpone the effective date of the rule.