- April 24, 2024
- Alerts
DOL Issues Final Rule Expanding Overtime Eligibility Nationwide
Highlights:
The Rule and Timing
On April 23, 2024, the Department of Labor (DOL) issued a final rule expanding eligibility for overtime pay (the Rule). This is a federal rule and will set the floor for eligibility for overtime pay nationwide. Individual states may require even higher minimum salary thresholds.
The Rule increases the minimum salary threshold for employees to qualify for the “white collar” or “executive, administrative, and professional employee” exemptions from overtime. Once fully implemented, the Rule will require employers to pay overtime rates to all workers earning less than $1,128 per week. Although certain states already use higher salary standards for overtime eligibility – for example, New York’s threshold is either $1,124 or $1,200 per week, depending on locale – the Rule significantly increases the current federal standard of $684 per week (or $35,568 per year).
DOL will implement the new minimum salary requirements in two phases (although implementation may be delayed by legal challenges). On July 1, 2024, the salary threshold will increase to $844 per week ($43,888 per year). Then, on January 1, 2025, it will increase to $1,128 per week ($58,656 per year).
The Rule also increases the minimum salary to qualify for the “highly compensated employee” exemption. The current threshold for “highly compensated employees” is $107,432 per year – but that number will increase to $132,964 per year on July 1, 2024, and to $151,164 per year on January 1, 2025.
Next Steps
Going forward, these minimum salary thresholds will be adjusted every three years, with the first adjustment slated for July 1, 2027. It is likely the Rule will be challenged in federal court. If the Rule is stayed by the court, employers may delay implementation of the higher salary thresholds.
In the interim however, employers should promptly assess their policies to ensure workers are properly classified with respect to overtime eligibility. Specifically, employers should review both the salaries and job duties of staff currently designated as exempt, to determine whether these individuals will become eligible for overtime pay under the Rule.
Should you have any questions regarding the above, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at info@garfunkelwild.com.
- New DOL Rule Increases Minimum Salary Threshold for Overtime Pay from $684 to $1,128 per week.
- New DOL Rule also Increases Minimum Salary for “Highly Compensated Employees” from $107,432 to $132,964.
- New Rule Set to Take Effect July 1, 2024.
The Rule and Timing
On April 23, 2024, the Department of Labor (DOL) issued a final rule expanding eligibility for overtime pay (the Rule). This is a federal rule and will set the floor for eligibility for overtime pay nationwide. Individual states may require even higher minimum salary thresholds.
The Rule increases the minimum salary threshold for employees to qualify for the “white collar” or “executive, administrative, and professional employee” exemptions from overtime. Once fully implemented, the Rule will require employers to pay overtime rates to all workers earning less than $1,128 per week. Although certain states already use higher salary standards for overtime eligibility – for example, New York’s threshold is either $1,124 or $1,200 per week, depending on locale – the Rule significantly increases the current federal standard of $684 per week (or $35,568 per year).
DOL will implement the new minimum salary requirements in two phases (although implementation may be delayed by legal challenges). On July 1, 2024, the salary threshold will increase to $844 per week ($43,888 per year). Then, on January 1, 2025, it will increase to $1,128 per week ($58,656 per year).
The Rule also increases the minimum salary to qualify for the “highly compensated employee” exemption. The current threshold for “highly compensated employees” is $107,432 per year – but that number will increase to $132,964 per year on July 1, 2024, and to $151,164 per year on January 1, 2025.
Next Steps
Going forward, these minimum salary thresholds will be adjusted every three years, with the first adjustment slated for July 1, 2027. It is likely the Rule will be challenged in federal court. If the Rule is stayed by the court, employers may delay implementation of the higher salary thresholds.
In the interim however, employers should promptly assess their policies to ensure workers are properly classified with respect to overtime eligibility. Specifically, employers should review both the salaries and job duties of staff currently designated as exempt, to determine whether these individuals will become eligible for overtime pay under the Rule.
Should you have any questions regarding the above, please contact the authors, the Garfunkel Wild attorney with whom you regularly work, or contact us at info@garfunkelwild.com.