The Fair Labor Standards Act (FLSA or Act) requires covered employers to pay employees a minimum wage and, for employees who work more than 40 hours in a week, overtime premium pay of at least 1.5 times the employee’s regular rate of pay. Section 13(a)(1) of the FLSA exempts from the minimum wage and overtime pay requirements “any employee employed in a bona fide executive, administrative, or professional capacity”. The exemption is commonly referred to as the “white-collar” or executive, administrative or professional (EAP) exemption.
The U.S. Department of Labor (DOL) has issued a new federal overtime rule for executive, administrative, and professional employees. See, Federal Register:: Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees. This rule will raise the salary level trigger for when certain employees will be exempt from receiving overtime compensation. As of July 1, 2024, the salary level trigger for employees who are otherwise exempt from overtime will be $844 per week ($43,888 per year). As of July 1, 2025, the magic dividing line will increase to $1,128 per week ($58,656 per year). That number will continue to go up in future years.
The DOL’s FAQ can be found in Frequently Asked Questions – Final Rule: Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees | U.S. Department of Labor (dol.gov).
Please make sure that your HR department considers these developments and contact your Tressler attorney if you have questions.
For more information about this article, contact Tressler attorney John O’Driscoll at jodriscoll@tresslerllp.com.