FLSA Salary Limit Increase for Exemption Status
Effective July 1st, salary limits for exemption from overtime will increase as step one of a two-step transition. This means significant change for many employers. The Fair Labor Standards Act (FLSA) provides certain exemptions from minimum wage and overtime payment provisions, namely employees in executive, administrative, professional, and some outside sales and computer-related occupations.
So, what changed?
To qualify for exemption, white-collar employees must satisfy the standard salary level test, among other criteria. The DOL’s final rule increases the standard salary level from:
- July 1, 2024: $684 to $844 per week ($35,568 to $43,888 per year) and then;
- January 1, 2025: $1,128 per week ($58,656 per year) and also includes;
- Highly compensated employee threshold increases: $107,432 to $132,964 per year on July 1, 2024, and then to $151,164 on January 1, 2025.
What to Do Next:
BOOST recommends that clients start exemption status reviews now to ensure proper classification and avoid FLSA violations. At a minimum, identify all employees currently classified as exempt and ensure that salaries meet the minimum threshold of $43,888. Then, start to prepare for the January 1, 2025 increase to $58,656.
While BOOST recommends that clients prepare for this change, we also recommend making the changes effective on the first payroll date after July 1 to avoid confusion or potential last-minute changes to the ruling. Please keep in mind that meeting the minimum salary requirement is not always enough to meet the exemption standard, so a regular review of role duties is highly recommended.
If you have any questions or require assistance regarding the new FLSA requirements, please reach out to [email protected].
About The Author, Carolyn McKinney
Carolyn McKinney, ACC, SPHR, SHRM-SCP, is a Senior HR Consultant at BOOST. Previously Carolyn held the role of CHRO and was responsible for strategic human resources leadership, including the design and implementation of key initiatives in diversity and inclusion, strategic workforce planning, talent management, organizational development, compensation, benefits, HRMS and compliance.
