DOL Issues Final Overtime Rule
Contact Clara (C.B.) Burns, Gilbert L. Sanchez, Isaac J. Blanco and Metzeri A. Camacho -
April 23, 2024
On Tuesday, April 23, 2024, the Department of Labor (DOL) issued its long-awaited final rule raising the salary threshold for overtime exemptions.
To meet the salary threshold for bona fide executive, administrative and professional employees, effective July 1, 2024, the new annual salary requirement is $43,888. Effective January 1, 2025, the salary requirement will increase to $58,656. The current rate is $35,568, based on a $684 weekly requirement. Accordingly, to maintain exempt status for executive, administrative and professional employees whose salaries are below the new thresholds, employers need to increase those salaries to the appropriate levels by July 1, 2024 and January 1, 2025 accordingly.
The new rule also raises the salary threshold for highly compensated employees to $132,964 in July 2024, and to $151,164 in January 2025.
The thresholds will be adjusted every three years.
The first increases, effective July 1, 2024, use methodology from a Trump-era rule that set the salary level based off of the 20th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census region. The January 1, 2025 increases use new methodology tying the salary level to the 35th percentile of earnings in the poorest Census region.
As with most regulatory activity from the Department of Labor, we expect to see challenges to the new rule in federal courts, and we will update accordingly with any new information.
To meet the salary threshold for bona fide executive, administrative and professional employees, effective July 1, 2024, the new annual salary requirement is $43,888. Effective January 1, 2025, the salary requirement will increase to $58,656. The current rate is $35,568, based on a $684 weekly requirement. Accordingly, to maintain exempt status for executive, administrative and professional employees whose salaries are below the new thresholds, employers need to increase those salaries to the appropriate levels by July 1, 2024 and January 1, 2025 accordingly.
The new rule also raises the salary threshold for highly compensated employees to $132,964 in July 2024, and to $151,164 in January 2025.
The thresholds will be adjusted every three years.
The first increases, effective July 1, 2024, use methodology from a Trump-era rule that set the salary level based off of the 20th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census region. The January 1, 2025 increases use new methodology tying the salary level to the 35th percentile of earnings in the poorest Census region.
As with most regulatory activity from the Department of Labor, we expect to see challenges to the new rule in federal courts, and we will update accordingly with any new information.