Introduction. The Fair Labor Standards Act (“FLSA”) generally provides that when most employees work more than a 40-hour week, they are entitled to additional compensation. Commencing on July 1, 2024 the Department of Labor (“DOL”) regulations will provide new eligibility standards for overtime pay. Required overtime pay will now apply to workers earning less than $844/week (i.e., $43,888/year). The current rate is $684/week (i.e., $35,568/year).
Exemptions From New Law. These include bona fide executive, administrative or professional employees (typically referred to as the “EAP” exemption). They apply when:
1. The employee is paid a salary;
2. It is not below the minimum salary threshold amount; and
3. The employee primarily performs executive, administrative or professional duties.
Generally. The DOL’s new overtime rule was based upon 33,000+ written comments and almost 30 meetings with stakeholders across the US. The department’s final rule on July 1, 2024 will increase the standard salary level and clarify which salaried workers are entitled to overtime pay protections under the FLSA.
On January 1, 2025, the July 1, 2024 figures will increase; most salaried workers making less than $1,128/week (i.e., $58,656/year will become eligible for overtime pay. As these changes occur, job descriptions will determine overtime EAP exemption status.
The rule will also increase the total annual compensation requirement for highly compensated employees (who are not entitled to overtime pay under the FLSA (if certain requirements are met) from $107,432 per year to $132,964 per year on July 1, 2024, and to $151,164 per year on Jan. 1, 2025.
Starting July 1, 2027, these earnings thresholds will be updated every three years to keep pace with changes in worker salaries.
Conclusion. The above discussion is a summary only and not legal advice. MHCO members should consult with their own legal counsel to (a) find out whether their employees qualify under the new standards and (b) revisit the job descriptions they have for them. See the DOL website here for more information.
