The U.S. Department of Labor (DOL) has finalized a new rule to increased the salary thresholds for overtime exemption under the Fair Labor Standards Act (FLSA). Effective July 1, 2024, this rule changes overtime rules for lower-paid salaried workers, ensuring they are fairly compensated for their work.
Key Aspects of the New Overtime Rule
Increased Salary Thresholds:
- Effective July 1, 2024: The salary threshold for overtime exemption will rise to $844 per week, equivalent to $43,888 annually.
- Effective January 1, 2025: The threshold will further increase to $1,128 per week, or $58,656 annually
- Highly Compensated Employees: The total annual compensation threshold for highly compensated employees will increase to $132,964 on July 1, 2024, and to $151,164 on January 1, 2025.
Regular Updates on Increased Salary Thresholds:
- Starting July 1, 2027, and every three years thereafter, the salary thresholds will be automatically updated to reflect current wage data. This measure ensures that the thresholds remain relevant and do not erode over time due to inflation.
Impact of Increased Salary Thresholds on Workers
The new rule is expected to effect approximately 4.3 million workers. The largest numbers of affected workers are in professional and business services, health care and social services, and financial activities.
The DOL estimates that the rule will result in an annual income transfer of about $1.5 billion from employers to workers due to increased overtime pay.
Employer Responsibilities Regarding New Overtime Rule
Employers must comply with the new salary thresholds and may need to adjust their payroll practices accordingly. To ensure compliance with the updated regulations, employers are encouraged to review and potentially revise employment contracts and compensation structures.
For more details on the new overtime rule and increased salary thresholds, you can visit the U.S. Department of Labor’s website. For further analysis and perspectives, check out the Economic Policy Institute’s coverage.
Contact Us for Compliance Assistance
Stay ahead of these regulatory changes and ensure your organization is compliant. Contact HRDelivered today for expert guidance on adjusting your payroll practices and updating compensation structures. Our team can help you navigate these updates smoothly, ensuring your business remains compliant while supporting the financial well-being of your employees.
