Overtime Rule Changes on July 1, 2024 (or Does It?)
July 8, 2024
The (FLSA) requires that when most U.S. employees work more than a 40-hour work week, they get paid more.
But so-called EAP employees, those categorized as “executive, administrative, or professional,” have been specifically exempt from the FLSA’s minimum wage and overtime protections when:
- They are paid a salary,
- The salary is not less than a minimum salary threshold amount, and
- They primarily perform executive, administrative, or professional duties.
The new rule addresses the plight of many salaried “white collar” workers who don’t make an especially high salary and work overtime without the benefit of a time-and-a-half pay scale.
According to the U.S. Department of Labor, on July 1, 2024, a new rule will take effect that makes executive, administrative, and professional employees no longer exempt from federal minimum wage and mandatory time-and-a-half overtime pay requirements. The rule increases the standard salary level and the “highly compensated employee” (HCE) annual compensation threshold, and includes a way to update these earning thresholds to reflect current earnings data.
The new rule gives currently exempt EAP workers two initial increases to their salary threshold, increasing it to $844 a week ($43,888 a year) on July 1, 2024, and then, on January 1, 2025, increasing it again, to $1,128/week ($58,656 per year). HCEs are getting their compensation thresholds increased to $132,964 on July 1, and $151,164 on January 1, 2025.
But due to ongoing legal challenges, employers are uncertain as to whether the changes will actually take place or be soon blocked by the courts.
Where does that uncertainty leave HR departments? To remain legally compliant and protect your organization from penalties, both HR and payroll staff must be made aware of the new regulations and comply with them. HR must also make sure that employees potentially impacted by these changes are informed of them. At the same time, it is important to keep up to date on the new rule’s current legal challenges and their outcomes. These challenges may eventually reach the U.S. Supreme Court, and there have been indications that some of the Justices may not be amenable to the rule changes.