New Salary Level for Overtime Exemption

The Department of Labor announced a new salary threshold to determine an Executive, Administrative and Professional overtime exemption. The salary threshold will increase to the equivalent of an annual salary of $43,888($844 per week) effective July 1,2024 with an increase to $58,656 on Jan. 1, 2025. The July 1st increase updates the present annual salary threshold of $35,568. In addition, the rule will adjust the threshold for highly compensated employees. Starting July 1, 2027, salary thresholds will update every three years, by applying up-to-date wage data to determine new salary levels. To determine if a position would fall under the Executive, Administrative and Professional overtime exemption, an employee generally must meet three tests:

1. be paid a salary, meaning that they are paid a predetermined and fixed amount that is not subject to reduction because of variations in the quality or quantity of work performed;
2. be paid at least a specified weekly salary level; and
3. primarily perform executive, administrative, or professional duties, as provided in the Department of Labor's regulations.

Now is a good time to review job descriptions and salary levels to ensure compliance.  We will be glad to help with the review. 
More information can be found at: 
Final Rule: Restoring and Extending Overtime Protections | U.S. Department of Labor (dol.gov)
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Classifying workers is an important issue for employers and as of March 11, 2024, a new rule from the Department of Labor became effective. Certain tests help regulating agencies analyze worker classification issues.  Factors of the final rule to determine if the worker is an employee or contractor are the following;
 (1) opportunity for profit or loss depending on managerial skill;
(2) investments by the worker and the potential employer;
(3) degree of permanence of the work relationship;
(4) nature and degree of control;
5) extent to which the work performed is an integral part of the potential employer’s business; and
(6) skill and initiative.
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Misclassification can be costly to employers that may result in penalties, back taxes and wages.  For more information and guidance, contact [email protected]