The U.S. Department of Labor released its final rule raising the overtime exemption salary threshold for white-collar exemptions and the highly compensated employee exemption threshold.
Does the DOL’s overtime wage thresholds affect you or your business?
The White Collar Exemption Threshold
The final rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employee, raises the white-collar exemption threshold under the Fair Labor Standards Act to the equivalent of $43,888 annual salary on July 1, 2024. The exemption threshold will then increase to the equivalent of $58,656 on January 1, 2025. The current threshold is $684 a week, or about $35,568 per year.
The Highly Compensated Employee Exemption Threshold
For highly compensated employees, the salary threshold would go from $107,432 to $132,964 effective July 1, 2024, and then $151,164 in January 2025.
What Employers Need to Know
Although the final rule may be challenged in court, employers should prepare new plans to comply with the final rule.
Employers should audit their current workforce and determine which positions must be reclassified as non-exempt and eligible for overtime under the new rules and/or will require a salary bump to meet the new minimum salary threshold.
Employers should consider whether to reclassify those employees as nonexempt and eligible for overtime or give them raises to maintain their exempt status. Employers not prepared to make the leap should estimate future overtime costs and make adjustments accordingly. One adjustment may include redistributing work to reduce newly eligible employees’ overtime hours.
With added non-exempt employees comes added compliance liability risks. Hence, employers should ensure that they have accurate time-keeping policies and procedures to address an increase in non-exempt employees. This may require the purchase of new time record devices and software.
Also, employers should audit their current employee handbooks and policies regarding time keeping and overtime. In particular, employers should have policies in place that require employees to accurately report time worked, prohibit working overtime without authorization, prohibit off-the-clock work, and provide a reporting mechanism to address payment errors.
Having sound policies is important, but seldom sufficient by itself. It is equally important to train employees about the new overtime regulations.
Conclusion
If your company’s payroll will be impacted by this new rule and you would like guidance on how it affects overtime wage thresholds and your company, please reach out and let us know how we can help.
Kenneth Winkler, a shareholder at Berman Fink Van Horn, helps employers navigate the employment laws and regulations that govern the workplace.
Business is in Olivia Landrum’s DNA, but law was always in her future. Growing up in a family business and concentrating her undergraduate studies in finance was just the beginning. From an early age, Olivia also knew she wanted to study law. Today, as a Litigation Associate, Olivia’s background empowers her with the ability to understand both the business and the legal side of a matter.
A graduate of the University of Georgia School of Law, Olivia was a member of a winning Moot Court Competition team, served as Executive Notes Editor for the Georgia Journal of International and Comparative Law and was selected for the Clarke-Carley (formerly Lumpkin) Inn of Court. She received her Bachelor of Science in Finance from Auburn University. Olivia is also a proud alumni of Berman Fink Van Horn’s Summer Associate program.
Outside of the office, Olivia enjoys going for walks and exploring all that Atlanta has to offer, especially its neighborhoods, parks and local restaurants.
