The Federal Department of Labor (DOL) has introduced a significant change to the Salaried Exempt Threshold, which will impact many employers and employees. This ruling aims to ensure fair compensation for workers who put in extra hours, by raising the minimum salary required for an employee to be considered exempt from overtime pay. Here’s what you need to know about this important update.
Key Points of the Overtime Ruling
1. Higher Salary Threshold:
The new rule increases the minimum salary an employee must earn to be considered exempt from overtime pay.
- The Pre-July 2024 salary threshold is $684 per week or $35,568 per year.
- Starting July 1, 2024, the threshold will be raised to $844 per week or $42,888 per year.
- On January 1, 2025, the threshold will increase further to $1,128 per week or $58,656 per year.
- From July 1, 2027, and every three years thereafter, the threshold will be updated, with details to be determined at the time of each update.
2. More Overtime Eligibility:
Employees who earn less than the new threshold must be paid overtime if they work more than 40 hours a week. This change means that more employees will be eligible for overtime pay, ensuring they are fairly compensated for their extra hours.
What Can You Do About the New Salaried Exempt Threshold?
For Employers:
- Evaluate Salaries: Assess the salaries of your employees to determine who will be affected by the new thresholds.
- Adjust Compensation: You may need to either pay overtime to more employees or raise salaries to maintain their exempt status.
- Budget Accordingly: Plan for increased salary and overtime expenses in your budget.
- Reclassification Decisions: Develop a strategy for how to roll out any reclassification decisions to your staff.
- Training: Implement training for managers and employees on the new timekeeping requirements and rules against off-the-clock work.
For Employees:
- Understand Your Rights: If you earn less than the new threshold, you will be eligible for overtime pay, which means you could earn more if you work extra hours.
- Track Hours: Keep accurate records of your working hours to ensure you are properly compensated.
MAVENTRI Can Help Your Business Adapt to These Changes
The DOL’s ruling on the Salaried Exempt Threshold Increase represents a significant shift in overtime eligibility and fair compensation practices. Both employers and employees need to be aware of these changes and take proactive steps to adapt to the new requirements. By planning ahead and staying informed, businesses can ensure compliance while supporting their workforce.
For more information and assistance with adapting to these changes, contact MAVENTRI. We are here to help you navigate these updates and ensure a smooth transition for your business.