HR Compliance Alert: The Department of Labor’s final ruling regarding the salary threshold for exempt employees under the Fair Labor Standards Act (FLSA) has been released. Effective July 1, 2024, the annual salary threshold for exempt status will increase from $35,568 ($684/week) to $43,888 ($844/week). If an employee has a salary lower than $43,888, they cannot be considered exempt under the FLSA. In addition, the highly compensated employee exemption will increase on July 1, to $132,964. Further increases in both thresholds will take place again on January 1, 2025. At that time, the salary threshold for exempt status will move to $58,656 annually ($1,128/week).

This has potential to be a significant issue for employers and may be particularly challenging for non-profit organizations. The first step to take would be to look at those positions currently classified as exempt that are below the new salary threshold, and develop a plan to address how to become compliant. It’s important to remember that the salary threshold is only one part of the process to confirm exempt status. The Department of Labor still has its duties test that also needs to be applied.

The Department of Labor made a similar change to the salary threshold a handful of years ago that was never ultimately implemented. In fact it was stopped right before it was due to go into effect. This new regulation is also facing opposition and it’s unknown if it will be stopped or not at this time. It’s still strongly recommended that an analysis is done so your organization is prepared. And we will do what we can to keep our clients updated. Please know that our Client HR Services team is here to help you navigate next steps and we encourage all employers to review both the salaries and job duties of exempt employees to ensure that they are appropriately classified.

If you have questions or need assistance, please contact our Director of Client HR Services, Sue Winkler, at swinkler@millercooper.com.