Labor & Employment Blog

Effective July 1, 2024, the United States Department of Labor’s Final Rule will sharply increase the minimum salary amount that employers must pay in order to classify an employee as exempt from overtime pay under the common “white collar” exemptions (executive, administrative, and professional) and the highly compensated employee (HCE) exemption to the federal Fair Labor Standards Act (FLSA). The Final Rule consists of two specific phases of increases and is expected to impact over four million workers by 2025.

If the Final Rule goes into effect, the minimum salary requirement for the white collar exemptions will increase from $684 per week ($35,568 per year) to $844 per week ($43,888 annually) on July 1, 2024. The salary requirement will increase again to $1,128 per week ($58,656 annually) on January 1, 2025.

The Final Rule will also raise the total annual compensation level for the HCE exemption from the current $107,432 per year to $132,964 per year as of July 1, 2024, and $151,164 per year as of January 1, 2025.

Future changes to the minimum salary threshold will occur every three years, beginning January 1, 2027, under the Final Rule. Employers must also continue to satisfy the “duties tests” for the FLSA exemptions, which are unaffected by the Final Rule,

While it is possible that a federal court may block the Final Rule, employers should act now to identify any exempt employees whose current pay does not satisfy the new minimum salary thresholds and devise a strategy for compliance with the Final Rule. 

Chamberlain Hrdlicka’s Labor & Employment Group is available to answer any questions and help your business prepare for the Final Rule. Please feel free to send us an e-mail or call us.