The Department of Labor’s (DOL’s) final rule regarding overtime pay increases the salary threshold for exempt executive, administrative and professional employees. While the rule went into effect July 1, 2024, employers need to note the upcoming 2025 requirements.
The minimum salary threshold for exempt executive, administrative and professional employees will increase to $58,656, or $1,128 per week, on January 1. This increase is nearly $15,000 more than the current threshold of $43,888.
Employees who earn at least $132,964 annually, and customarily and regularly perform at least one of the duties of an exempt administrative, executive or professional employee, are considered highly compensated employees (HCEs). Starting January 1, 2025, the salary threshold for HCE’s will be raised to $151,164 annually.
After the 2025 increases, adjustments are scheduled for 2027 and every three years going forward.
The overtime ruling underscores the importance of ensuring employees are correctly classified per the DOL’s duties test. The DOL provides details on the requirements that must be met to classify a position as exempt from overtime. Generally, to meet the DOL’s exemption requirements employees must
- “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;
- be paid at least a specified weekly salary level; and
- primarily perform executive, administrative, or professional duties, as provided in the Department’s regulations.”
