On April 23, 2024 the U.S. Department of Labor issued its final rule increasing the salary requirements for employees to be considered exempt from overtime compensation under the executive, administrative and professional exemptions. The rule is set to take effect July 1, 2024. 

Currently, employees classified as exempt in these categories must be paid a minimum weekly salary of $684 ($35,568 annually).

The minimum salary amounts will increase twice over the next 12 months:

• As of July 1, 2024, this amount will increase to $844 per week ($43,888 annually).
• As of January 1, 2025, this amount will increase to $1,128 per week ($58,656 annually).

In addition, the threshold for highly compensated employees will increase on the same schedule from $107,432 per year to:

• $132,964 as of July 1, 2024; and
• $151,164 as of January 1, 2025.

The rule also includes a method for automatically updating these salary and compensation levels every three years based on a collection of current earnings data across the US. The first automatic update will occur on July 1, 2027.

A link to the press release from the DOL as well as the final rule in its entirety can be found here: https://www.dol.gov/newsroom/releases/whd/whd20240423-0

It is expected that this rule will face legal challenges. A 2019 rule raising compensation thresholds is currently being litigated in the Fifth Circuit.

In the meantime, clients should review the salaries of employees it has classified as exempt under the executive, administrative and/or professional exemption to identify any employees whose salaries might fall under the new requirements and be prepared to offer salary increases if necessary.

Our employment and labor law team will continue to monitor this rule and the legal actions relating to it and is available to consult regarding wage, hour and classification issues.