The Department of Labor released the long-awaited final rule addressing changes to overtime salary thresholds. The rule is pending publication in the Federal Register. Starting on July 1, 2024, executive, administrative and professional employees who are exempt from overtime based on their duties must earn a minimum annual equivalent of $43,888 ($844 per week), a nearly 24% increase from the current-day $35,568. The update reflects earnings growth consistent with the current-day DOL salary adjustment methodology.
What might catch some by surprise is that the threshold will be adjusted again on January 1, 2025, to a minimum annual equivalent of $58,656 ($1,128 per week). The DOL set the salary level to the 35th percentile of weekly earnings for full-time salaried workers in the lowest-wage Census Region.
The salary threshold for highly compensated employees (HCEs), who need only meet one of the exemption-qualifying duties, will jump from $107,432 to $132,964 starting July 1. The adjustment tracks the existing DOL earnings calculation. The January 1, 2025, adjustment raises the threshold to $151,164 annually. In the setting of the HCE earnings formula, the DOL based adjustments on the 85th percentile of all full-time salaried workers nationally. Following the 2025, salary adjustments, the next adjustment is slated for July 1, 2027, and every three years thereafter.
If your business needs guidance to prepare for the overtime rule, contact our HR Consulting team.
