Recently, the U.S. Department of Labor announced changes to the rules for overtime thresholds for salaries who are eligible to receive overtime. Here’s what employers need to know:

The Fair Labor Standards Act (“FLSA”) will enact new rules on July 1, 2024, which detail the threshold levels for when employees are eligible for overtime pay. Starting on July 1, 2024, salary threshold for exempt employees is set to increase from $35,568 to $43,888 per year. The thresholds will increase again on January 1, 2025, to $58,656. The threshold will automatically adjust to then current wage rates in three years, which will occur on July 1, 2027, unless further rule making is undertaken during that time. Overtime exemptions apply to workers employed as bona fide executive, administrative, professional, and outside sales employees, as well as some computer employees. The higher tier overtime exemption, which applies to certain highly compensated individuals, the increase will increase the minimum salary threshold to $132,964 on July 1, and to $151,164 on Jan. 1, 2025.

As we had published earlier, other employees can meet the requirements for overtime, such as daily rate workers. These workers must be paid on a defined salary basis, or if not, meet certain minimum requirements. These regulations have held that daily, weekly or shift rate workers can meet the requirements, if the employer guarantees a minimum salary is received. Variable daily rate compensation will not satisfy what is required. Providing more structure to the payments to employees will change the analysis for the FSLA overtime exemptions for employees. 

As the regulatory environment for employers evolves, understanding how your workforce is affected can be challenging. OGC Solutions® can assist you as you manage the changing environment of your workforce.

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