The U.S. Department of Labor (DOL) recently made a final ruling on salary thresholds for exempt employees under the Fair Labor Standards Act (FLSA).

Overview of the DOL's Final Ruling

The DOL has announced an increase in the salary level required for executive, administrative, and professional employees to be exempt from overtime pay requirements. Starting from July 1, 2024, the new salary threshold will be set at $43,888 per year (or $844 per week).

This change means that employees who earn less than $43,888 annually must now be paid overtime for any hours worked beyond 40 in a workweek, regardless of their job duties or titles.

Starting July 1, 2025, the threshold will then increase to $58,656 per year (or $1,128 per week).

Implications for Your Business

• Compliance: It is crucial to review your current payroll practices and ensure that all employees are correctly classified according to the new standards.

• Payroll Adjustments: You may need to consider raising the salaries of certain exempt employees to maintain their exempt status or prepare to compensate them for overtime work.

• Budget Planning: The adjustment in salary thresholds could impact your labor budget. Careful planning and forecasting will be necessary to manage additional labor costs effectively.

Recommended Actions

• Audit Employee Classifications: Review the status of your current employees to determine who might be affected by the new salary threshold.

• Evaluate Compensation Strategies: Determine whether to increase salaries to meet the new threshold or adjust to an hourly pay structure for affected employees.

• Update Payroll Systems: Make sure your payroll system is updated to reflect these changes and can accurately track overtime for newly non-exempt employees.

• Communicate with Your Team: Ensure your management team and affected employees are aware of these changes and understand how they will be implemented within your organization.

How we can help

Feel free to contact us to discuss how this ruling specifically affects your business. We are here to support you through this transition and ensure you maintain compliance with these new regulations.