Federal Law Requires Pay Increase of Salaried Employees to $43,888 by July 1, 2024, and $58,656 by January 1, 2025.
The Department of Labor (DOL) is implementing a new final rule that will raise the minimum salary threshold of exempt employees to $43,888 by July 1, 2024, and $58,656 by January 1, 2025.
The DOL states that “the new standard salary level will ensure that, consistent with the Department’s historical approach to the exemption, fewer lower-paid white-collar employees who perform significant amounts of nonexempt work are included in the exemption.” The DOL is setting the standard salary level at the 35th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region
For background, the Fair Labor Standards Act (FLSA or Act) requires covered employers to pay employees a minimum wage and, for employees who work more than 40 hours in a week, overtime premium pay of at least 1.5 times the employee’s regular rate of pay. Section 13(a)(1) of the FLSA exempts from the minimum wage and overtime pay requirements “any employee employed in a bona fide executive, administrative, or professional capacity. The exemption is commonly referred to as the “white-collar” or executive, administrative, or professional (EAP) exemption.
The statute expressly gives the Secretary of Labor (Secretary) authority to define and delimit the terms of the exemption. Since 1940, the regulations implementing the EAP exemption have generally required that each of the following three tests must be met: (1) the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the salary basis test); (2) the amount of salary paid must meet a minimum specified amount (the salary level test); and (3) the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (the duties test). The employer bears the burden of establishing the applicability of the exemption.
Job titles and job descriptions do not determine EAP exemption status, nor does merely paying an employee a salary.
Consistent with its broad authority under the Act, in this final rule the Department is setting compensation thresholds for the standard test. The compensation thresholds for the standard test are tiered – with one increase to $43,888 by July 1, 2024, and the second increase to $58,656 by January 1, 2025.
Source: Federal Register.
Employers who fail to increase employees to these thresholds may be subject to liability, attorney fees, and other penalties.
Ohio Overtime Laws and Federal Overtime Laws can be complex, and it is recommended that you reach out to an Employment Law Attorney to discuss your case or to have questions answered.