04/29/2024 | Press release | Distributed by Public on 04/29/2024 12:34
On April 23, the Biden-Harris administration announced the expansion of overtime protections for millions of lower-paid, salaried employees. The final rule increases the salary threshold required to exempt bona fide executive, administrative or professional employees and highly compensated employees from the Fair Labor Standards Act (FLSA).
While this new rule will face legal challenges, it could still affect your business. Here's how.
For employees whose job duties meet the criteria for the white-collar exemptions (administrative, executive or professional exemptions), the minimum salary to maintain FLSA-exempt status will increase twice within the next nine months to:
Under the Department of Labor's current requirements, certain highly paid employees who perform office-based or non-manual labor and earn at least $107,432 annually (including a minimum of $684 per week on a salary or fee basis) qualify for the exemption.
These employees must also routinely perform at least one duty typical of an exempt executive, administrative or professional employee as outlined by the Department of Labor's Wage and Hour Division. The new regulations will raise this threshold to:
Subsequent, undefined adjustments are scheduled for July 1, 2027, and every three years that follow.
Organizations that currently pay salaried, exempt employees less than $43,888 per year may see their costs per impacted employee increase significantly between now and January 2025.
According to the Department of Labor, the most affected industries include:
Like previous rules related to FLSA, the new overtime rule will likely face several legal challenges. Though it likely won't pass, one member of Congress has proposed legislation that seeks to prohibit the Secretary of Labor from implementing and enforcing the rule.
Similarly, a 2016 rule that sought to increase the standard salary level from $455 to $933 per week was invalidated less than 10 days before it was to take effect. However, the new rule seeks to avoid the same fate by setting the salary threshold at the 35th percentile of full-time, salaried employees in the lowest-wage census region. (In contrast, the 2016 rule used the 40th percentile.)
Despite possible challenges to the rule, employers should:
Some organizations may hold on acting until the July 1 deadline to give the courts time to address challenges to the new rule.
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