The U.S. Department of Labor (DOL) released its final ruling on overtime regulations, updating and revising the regulations under the Fair Labor Standards Act (FLSA). The new regulations implement exemptions from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees. The rule includes two-tiered increases to the minimum salary threshold and the threshold for highly compensated employees (HCE) as well as automatic updates to both thresholds.
The minimum salary threshold for any worker to be exempt from receiving overtime pay will be increased to $43,888 on July 1, 2024, and then to $58,656 on January 1, 2025. This represents more than a 60% increase from the current threshold of $35,568. DOL said that the first increase updates the minimum salary threshold using the Department’s current methodology, which was used in the 2019 Trump administration overtime rulemaking to set the current standard.
The second increase then implements the Department’s new preferred methodology, which sets the minimum salary threshold to the 35th percentile of weekly earnings of full-time salaried workers in the lowest wage Census region.
“We are disappointed that the Department of Labor did not listen to the reality of the problems its overtime proposal will cause,” said Doug Kantor, General Counsel at NACS. “By dramatically changing the law and treating every market in the country as if they are the same, the Department of Labor is doing a disservice to employees and small businesses alike. The rule will reduce employees’ flexibility and its costs will fuel inflation. It is even worse for businesses and their employees than the one that the courts struck down in 2017. We expect that the rule announced today will be challenged and overturned as well.”
In November 2023, NACS filed comments regarding the Fair Labor Standards Act. NACS opposed the increase, stating it would most noticeably impact store managers and assistant managers.
By initially updating the threshold on July 1 and holding dramatic increases until January 1, DOL has at least delayed some of the burden this change will have on employers.