On April 23, 2024, the US Department of Labor (DOL) announced incremental increases to the compensation thresholds used in determining whether an employee is exempt from federal overtime pay requirements.
The changes take effect on July 1, 2024 and are expected to affect millions of employees previously deemed exempt. The new rules encompass thresholds for both “highly-compensated employees” (HEC’s) and “executive, administrative, or professional” employees (EAP’s).
As of July 1, 2024
- To qualify as an EAP-exempt employee, the threshold increases from $684 per week (or the equivalent of $35,568 annually) to $844 per week (or the equivalent of $43,888 annually).
- To qualify as an HCE-exempt employee, the threshold increases from $107,432 to $132,964 annually.
As of January 1, 2025
- To qualify as an EAP-exempt employee, the threshold increases to $1,128 per week (or the equivalent of $58,656 annually).
- To qualify as an HCE-exempt employee, the threshold increases to $151,164 annually.
In addition, on July 1, 2027, the DOL will adjust the EAP and HCE thresholds every three years. These increases are based on the Bureau of Labor Statistics’ most recently available earnings data.
Depending on the nature of your workforce, preparing for these changes could be challenging and you may have many questions, such as:
- How will this affect company budgets?
- Would targeted salary increases for certain employees to exceed exempt thresholds be more cost effective?
- Are scheduling changes the best way to contain costs?
- How will this be communicated to employees?
For detailed information on the DOL’s updated overtime rules and how to manage any potential financial repercussions, call us at (401) 921-2000 or contact us here. We are ready and happy to assist you.