Law Update – Changes to FLSA Minimum Salary

New Minimum Salary - Effective July 1st, 2024

The U.S. Department of Labor (DOL) has announced significant changes to the Fair Labor Standards Act (FLSA) regulations regarding salary thresholds for exempt employees. These changes, set to take effect on July 1, 2024, will impact the classification of employees as exempt from overtime pay. Here is a comprehensive overview of the upcoming and important dates you need to be aware of:

New Salary Thresholds

1. Effective July 1st 2024

The minimum salary threshold for executive, administrative and professional employees will increase from $684 per week ($35,568 annually) to $844 per week ($43,888 annually).

The total annual compensation requirement for highly compensated employees will increase to $132,964.

2. Effective January 1st 2025

The salary threshold will further increase to a new minimum of $1,128 per week ($58,656 annually).

The total annual compensation requirement for highly compensated employees will rise to $151,164.

These increases are designed to ensure that more salaried workers receive overtime pay if they work more than 40 hours a week.

For a fact sheet which provides more information on the types of employees who can be exempt from both minimum wage and overtime pay and therefore paid a salary as an "Exempt" employee, click Who Can Be Paid Salary?

Future Automatic Updates

Starting on July 1, 2027, and every three (3) years thereafter, the salary thresholds will be automatically updated to reflect changes in economic conditions. This mechanism is intended to keep the salary thresholds relevant and responsive to inflation and wage growth.

Important Compliance Steps for Employers

1. Review Employee Classifications - Evaluate which employees will be impacted by the new salary thresholds. Ensure that those who no longer meet the exemption criteria are reclassified as non-exempt and eligible for overtime pay.

2. Adjust Salaries - For employees who need to remain exempt, consider adjusting their salaries to meet the new thresholds.

3. Update Your Payroll System - Ensure you have updated necessary employee profiles with their new salary figures for upcoming check dates.

4. Communicate Changes - Clearly communicate any changes in classification or salary adjustments to affected employees to manage expectations and maintain morale.

5. Consult Employment Attorneys and/or HR Consultants - Consult with HR professionals and employment lawyers to ensure full compliance with the new regulations and to navigate any complexities which may arise from your specific scenario.

Do you have additional questions about overtime or how to calculate and track hours efficiently? iComp Payroll & HR has over 25 years of experience in payroll, human resources, and timekeeping services for small and medium sized businesses in Minnesota and across the Midwest.

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[Disclaimer: This blog post is for informational purposes only and should not be construed as legal advice. Employers should consult with legal counsel or HR professionals for guidance on complying with all applicable rules and regulations.]