DOL Releases Overtime Rule Nearly Doubling Salary Threshold Affecting Millions Of Employees

The Department of Labor (DOL) released its highly anticipated final rule regarding overtime for white collar workers. As expected, the final rule will nearly double the salary threshold for exempt workers beginning January 1, 2025, with a smaller increase beginning on July 1, 2024. The final rule also increased the salary level for the highly compensated employee exemption. Below is a table with the scheduled increases:

Effective Date	Salary Threshold for Exempt Employees	Annual Compensation Threshold for Highly Compensated Employee Exemption
Before July 1, 2024	$684 per week (equivalent to $35,568 per year)	$107,432 per year
July 1, 2024	$844 per week (equivalent to $43,888 per year)	$132,964 per year
January 1, 2025	$1,128 per week (equivalent to $58,656 per year)	$151,164 per year
July 1, 2027, and every 3 years thereafter	To be determined at a later date by the DOL	To be determined at a later date by the DOL

Although the final rule will likely be subject to challenges, the time to act on compliance is now given the first wave of increases will occur in a little over 2 months. The DOL estimates that approximately 1 million employees will be impacted by the initial increase in July 2024 and another 3 million will be impacted by the increase in January 2025.

Employers should assess their workforce now and determine the following:

which employees meet the new salary thresholds,
which employees’ salaries should be increased to meet the new threshold,
which employees should be paid overtime, and
if the employees meet the new salary threshold, ensure those employees meet the duties test to be exempt from overtime requirements.

Should you need assistance or have questions about the final rule, please reach out to a member of the Labor and Employment Group at McGrath North.