Toward the end of 2023, The U.S. Department of Labor announced a notice of proposed rulemaking to increase the threshold minimum annual salary requirements for exempt employees and “highly compensated employees” under the FLSA’s overtime pay requirements. On April 11, 2024, the White House Office of Information and Regulatory Affairs announced that it has completed their review of the new rule. This is the final regulatory step prior to the release of the final rule.

Under the current rules, an employee must meet the minimum salary requirements of $684 per week or $35,568 annually for that employee to be exempt from the FLSA overtime rules.

The new rule would increase this threshold to $1,059 per week, or $55,068 annually. This is based on 2022 salary numbers, and a footnote to the proposal indicates that the final version of the rule may have a higher threshold.

The rule would also change the annual salary requirements for employees who are considered “highly compensated employees.” Under the current rule, employees who make more than $107,432 annually, regardless of job duties, can be considered exempt from overtime rules since they are highly compensated. The new rule will raise this limit to $143,988 annually for an employee to be considered exempt under the “highly compensated employee” exemption.

Any currently exempt employees that remain below the new salary threshold would become non-exempt and be subject to overtime regulations and pay going forward once the US Department of Labor issues the rule.

This rule is anticipated to be issued by the U.S. Department of Labor sometime in next few weeks and will go into effect 60 days after the new rule is issued. Though legal challenges may delay this implementation. In preparation for this potential increase, a review of current FLSA Exempt/Non-exempt employees and their salary levels to ensure they comply with the new minimum salary requirements would be suggested to proactively begin to address any changes that may be required. For more information or assistance in reviewing your current job descriptions for exemption eligibility, please reach out to info@lever1.com.

Michael Rehak | Compliance Manager

As Compliance Manager for Lever1, Michael Rehak merges his legal expertise with practical business solutions. With a background in law, he navigates the complex regulatory landscape, ensuring clients’ are compliant with all regulations and laws. He works closely with clients offering tailored strategies to optimize compliance while maximizing operational efficiency. With a client-centric approach, he fosters strong relationships, earning trust as a reliable partner in navigating the ever-evolving regulatory environment.