New Salary Requirements for Exempt Employees Begin in July

Employer Alert: New Salary Requirements for Exempt Employees Begin in July

By Leni Plimpton

In a long-awaited announcement, the United States Department of Labor (“DOL”) issued a final rule raising the minimum salary requirements under the Fair Labor Standards Act (“FLSA”).

While salaried employees already easily meet the minimum in some labor markets, the announcement is still important news that will affect many employers. The new rule increases the salary threshold for executive, administrative, and professional employees to $44,888 on July 1, 2024, and $58,656 annually starting January 1, 2025. Previously, the minimum salary was $35,568 per year, and the last update was in 2020. After that, beginning in 2027, the amount will be increased to reflect” current earning data.” This data will likely be based on salaried workers’ weekly earnings in the lowest-wage region (currently the South).

The new rule also increases the salary threshold for “highly compensated” employees from $107,432 to $132,964 per year starting very soon—July 1, 2024, and $151,164 per year beginning January 1, 2025. Like the white-collar exemption, this amount will be updated every three years in 2027.

Employers must know that state or local laws may impose higher salary requirements. For example, in California, the minimum is $66,560 per year) and in Colorado, it is $55,000 per year. Failure to meet wage laws can come with hefty penalties. Employers should consult experienced employment counsel to ensure they pay the correct salary to exempt employees under state laws that apply to their workers.

In light of this development, Employers should review their wage classifications and salary levels immediately. The deadline is fast approaching. By July 1, 2024, exempt executive, administrative and professional employees must be paid the new salary threshold or more, and the amount increases again in less than a year on January 1st. 

Because the salary threshold is not the only requirement for exemption, employers should also take this opportunity to audit to ensure that all exempt employees are meeting the other requirements, such as job duties, authority, education, and more. For more information, contact a Fortis Law Partners employment team member.

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Lenora Plimpton

Lenora Plimpton

Lenora (Leni) specializes in employment and commercial litigation. She has experience with a wide range of employment and labor matters, including claims of age, race, and sex discrimination; disability discrimination; EEOC and CCRD charges of discrimination; mediations; arbitrations; and unemployment insurance audits.

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