(PRESS RELEASE) Previously, The Vision Council called to its members’ attention that the U.S. Department of Labor’s Wage and Hour Division had issued a proposed notice of rulemaking to update and revise the regulations currently implementing the exemption of certain white-collar employees from minimum wage and overtime pay. A copy that earlier information can be found here. That final rule was recently published, resulting in new federal salary thresholds that will impact employers. The following are the key take aways from the final rule, which amendment goes into effect on July 1, 2024, and will be updated every three years thereafter.
New Salary Requirements to Qualify as Exempt from Minimum Wage and Overtime
- To qualify as an executive, administrative, or professional employee (“EAP”) under the Fair Label Standards Act (FLSA), and thus exempt from the overtime and minimum wage pay requirement, an employee must generally be compensated on a predetermined and fixed salary basis at a weekly rate not less than:
- Beginning July 1, 2024, $844 per week ($43,888 per year); increased from the current rate of $684 per week ($35,568 per year).
- Beginning January 1, 2025, $1,128 per week ($58,656 per year).
- To be exempted from overtime and minimum wage as a highly compensated employee (“HCP”), the final rule increases the amount of annual compensation an employee earns to:
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- Beginning July 1, 2024, $132,965 or more per year; increased from the current amount of $107,432 (at least $684 per week).
- Beginning July 1, 2025, $151,164 or more per year.
Certain employees, including doctors, lawyers, teachers and outside sales employees are not subject to the salary tests. Also, qualifying as either an EAP or an HCP requires satisfaction of other regulatory requirements setting out certain duties associated with executives, administrative, professional employees.
Will These Changes Really Go into Effect?
Time will tell whether the changes will be implemented on July 1, 2024. In 2016, the Labor Department pushed forward a similar proposed rulemaking, only to have it struck down by a federal district court in Texas. As of now, no court case has been brought to enjoin the changes from going live on July 1st.
However, two Republican lawmakers, Rep. Tim Walberg (Mich) and Sen. Mike Braun (Ind) have introduced a resolution under the Congressional Review Act (“CRA”) to block the changes from being promulgated. Under the CRA, agencies must report the issuances of rules to Congress and provide Congress with special procedures in the form of a joint resolution of disapproval under which Congress may overturn the administrative rule. If a joint resolution is approved or disapproved by the Senate and the House and is signed by the President, or if Congress were to override a Presidential veto, then the rule cannot go into effect.
We will continue to monitor this matter and will advise the association of further developments on this topic. Any questions can be directed to Rick Van Arnam, The Vision Council’s Regulatory Affairs Counsel or Taylor Hartman our Government Relations Coordinator.
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