On April 23, 2024, the Department of Labor (DOL) announced a final overtime rule. The latest rule, titled Defining and Delimiting the Exemptions for Executive, Professional, Outside Sales, and Computer Employees, revises existing regulations under the Fair Labor Standards Act (FLSA). This shift has the potential to impact a large number of employees who are currently classified as exempt. Employers must assess all exempt employees to determine where changes need to be made. Learn all about the overtime threshold, including which changes go into effect as soon as July 1, 2024.
All About the FLSA Overtime Threshold
Under the FLSA, certain employees are required to be paid overtime for all hours worked beyond 40 in a workweek. However, the law also includes exemptions, referred to as “white collar.” Those working in specific executive, administrative, or professional roles and perform the corresponding duties, as well as earning above a certain threshold, can be deemed exempt. This classification serves as an exemption to the overtime requirement.
Additionally, highly compensated employees (HCEs) have a separate threshold that serves as an exemption to the OT rule.
Final Rule Updates
The recently released final rule makes three major changes:
- Raises the minimum salary threshold: Previously, the salary threshold for executive, administrative, and professional services (EAP) employees was $684 per week or $35,568 per year. The new salary threshold, effective July 1, 2024, is $844 per week or $43,888 per year.
The DOL also announced that the threshold will further increase on January 1, 2025, to $1,128 per week or $58,656 per year. - Allows for automatic updating: The final rule also includes a mechanism that will ensure the automatic threshold is automatically updated every three years. The updated threshold will be determined by wage data at the time of the determination.
- Increases the HCE threshold: The total annual compensation threshold for highly compensated employees will also be raised in two phases. Effective July 1, 2024, the threshold will be $132,964. Effective January 1, 2025, it will further be increased to $151,164.
Next Steps for Employers
As an employer, your next step should include consulting with an attorney to determine the best strategy for ensuring compliance with the updated overtime threshold.
The following options may fit into your strategy on handling the change:
- Increasing the salaries of all exempt employees who fall below the minimum
- Reclassifying employees as non-exempt, subjecting them to overtime pay for all hours worked beyond 40 in a workweek
Tracking non-exempt employee time
If your organization goes the reclassification method, part of that process involves tracking time. In order to determine the number of hours worked, and when an employee should receive OT pay, the business needs to maintain accurate time and attendance records.
WorkforceHub is a timekeeping solution built for small business needs. It’s user-friendly and highly accessible, making it a great fit for those who are new to tracking their time. And if you have on-the-go or remote workers who will become non-exempt in response to the updated rule, you can utilize the mobile app for simplified punching. With available geofencing capabilities, it’s easy for supervisors to see where employees are located when recording punches.
Ensure compliance with the DOL final rule, along with other time and labor regulations, with WorkforceHub. Learn more about this highly intuitive platform and try it for free today!
