Compensation Increases Expected Exempt Employees

Compensation Increases Expected Exempt Employees

The Department of Labor (DOL) increased the minimum salary thresholds for employees covered by overtime exemptions under the Fair Labor Standards Act (FSLA) at the end of April. Employees holding “white-collar” jobs such as executive, professional, and administrative jobs will be affected. The increase is slated to happen in phases:

  • July 1, 2024
  • January 1, 2025
  • July 1, 2027
  • With automatic increases every 3 years thereafter

If an employee’s salary falls below the increased threshold, then the employer will need to either increase the exempt employee’s salary to meet the guidelines or re-classify the employee as non-exempt and pay the required overtime.   

The current threshold for exempt employees is $684 weekly / $35,568 annually. The new guidelines indicate that the new minimums will increase to:

  • $844 weekly / $43,888 annually starting July 1, 2024
  • $1,128 weekly / $58,656 annually starting January 1, 2025

Some states where the state law minimum salary thresholds for exemption already exceed the new FLSA requirements, such as New York and California, will not be noticed immediately. In total, more than 4M employees are expected to have their salaries adjusted by 2025.

It will be important to audit exempt employees and their current salaries to stay ahead of the new requirements immediately since the first increase phase is only a couple months away. Employers are going to need to either increase salaries or reclassify employees. Since wage and hour lawsuits have been on the rise in the last several years, make sure you speak to your broker or reach out to TSIB to ensure that your Employment Practices Liability policy is endorsed to address such lawsuits. 

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