CareersIt has been a busy few weeks in employment law developments—from the FTC issuing a nationwide ban on non-competes to the EEOC publishing its final rule interpreting the Pregnant Workers’ Fairness Act and DOL revising its overtime regulations—employers are facing multiple compliance issues simultaneously. We previously published alerts about the FTC and EEOC rulemaking so be sure to check those articles out: here and here. This article summarizes the key provisions of the DOL’s final overtime rule set to take effect in July 2024.
The DOL’s final overtime rule raises the minimum salary threshold required for overtime exemptions for white-collar employees—executives, administrative staff, professionals, outside sales, and computer employees. The DOL rule makes no changes to the duties tests applicable to the exemptions.
Effective July 1, 2024, executive, administrative, and professional employees must receive a salary of at least $43,888 per year to be classified as exempt. This will increase again on January 1, 2025, to $58,656. Likewise, the salary basis for the highly compensated employee (HCE) exemption will increase on July 1, 2024, to $132,964 and to $151,164 on January 1, 2025. Currently, the salary thresholds for these exemptions are $35,568 and $107,432 respectively.
As with the FTC rulemaking regarding non-competes, legal challenges are expected. However, employers should not wait and see how the lawsuits shake out and should act proactively to prepare for these changes in the event the rule survives judicial scrutiny.
Employers should update their policies and review all exempt positions, including the duties performed, the hours worked by the employees in those positions, and current labor costs for those positions. For example, it may very well be that an exempt employee’s salary increase per the DOL’s final rule would result in higher labor costs than if that same employee is reclassified non-exempt and becomes eligible for overtime pay instead.
Employers will also need to conduct training and communicate these changes to their workforce and most importantly, to front-line managers tasked with managing payroll and tracking hours worked. Walter Haverfield attorneys are here to assist you with compliance and to answer your questions about each of the final rules issued by the DOL, FTC, and EEOC in recent weeks.
Jessica L. MacKeigan is senior counsel at Walter Haverfield who frequently represents employers in labor law and employment matters. She can be reached at jmackeigan@walterhav.com or 216.928.2928.