The US Department of Labor (DOL) recently announced a Final Rule that will bring significant changes to the minimum salary requirements for white collar exemptions from the federal minimum wage and overtime pay requirements under the Fair Labor Standards Act (FLSA). This development is crucial for employers to understand and implement, as it adjusts the earnings threshold necessary for exempt status.
As of April 23, the DOL has set a new schedule to increase the minimum salary for exempt employees. Previously set at $684 per week ($35,568 annually), the threshold will now see a two-tier increase. Starting July 1, 2024, the minimum salary requirement will rise to $844 per week, which equates to $43,888 annually. A further increase will take effect on January 1, 2025, when the threshold will jump to $1,128 per week, or $58,656 annually.
These changes do not exist in a vacuum. Maine law also prescribes minimum salary thresholds for exempt employees, which as of January 1, 2024, stand at $816.35 per week ($42,450.20 annually). This places the initial increase under the new DOL Rule slightly above the current Maine threshold. Consequently, Maine employers will need to adjust salaries for their exempt employees not once, but twice: first in July 2024 and again in January 2025, to maintain compliance.
In addition to the changes in the standard exemption thresholds, the DOL has also revised the compensation requirements for highly compensated employees. The exemption threshold for these employees will increase from the current $107,432 annually to $132,964 in July 2024, and then to $151,164 starting January 2025.
Furthermore, the DOL plans to update these salary thresholds every three years, starting July 1, 2027, to reflect changes in earnings data.
It is important for employers to note that the new rule could face legal challenges which may delay or alter the implementation of the thresholds. Nevertheless, proactive planning is advisable to avoid potential legal and financial repercussions. Employers are encouraged to evaluate existing exempt employees and determine whether salaries will be increased (if necessary) to meet the new thresholds, or whether a decision needs to be made to transition particular employees to a new non-exempt status. We encourage employers to consult with legal counsel to assist with these difficult questions.
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