Federal Law Update: Minimum Salary Increase for Exempt Employees
As of April 23, 2024, the U.S. Department of Labor has finalized their ruling increasing the salary threshold for employees to be exempt from federal overtime pay per the Fair Labor Standards Act (FLSA). This applies to your “white collar” workers also knows as APE, Executive, Administrative and Professional Employee, as well as Highly Compensated Employees.
Requirements for APE employees:
- Current wage minimum: $684 per week ($35,568 per year)
- Effective July 1, 2024, wage minimum: $844 per week ($43,888 per year)
- Effective January 1, 2025, wage minimum: $1,128 per week ($58,656 per year)
Requirements for “Highly Compensated Employees”
- Current wage minimum: $107,432 annually
- Effective July 1, 2024, wage minimum: $132,964 annually
- Effective January 1, 2025, wage minimum: $151,164 annually
With the new rule comes automatic updates to the minimum salary levels every three years, starting July 1, 2027.
There are certain professions such as teachers, practicing doctors and lawyers that are exempt from these minimum salary requirements. It is important to remember that some of these professions have state minimum requirements that may apply. School-specific minimums apply to academic administrative employees.
The new increase will affect certain states but not all, for example California and New York will not be affected based on their state minimum requirement already exceeding the FLSA requirements. It is important as an employer to identify if your state will be affected and know that this is projected to impact over 4 million employees.
How to stay compliant?
- Ensure that the new wage requirements are being met for all employees classified as exempt.
- If necessary, reclassify employees to nonexempt and provide them with the rights and benefits that nonexempt employees are entitled to such as overtime pay.
Click here for more information on the regulation ruling or contact the Anthros team.
