The U.S. Department of Labor (DOL) published new regulations for the Fair Labor Standards Act (FLSA) that increase the minimum salaries required for white-collar workers who are exempt from overtime. The new regulations raise the exempt salary threshold as of July 1, 2024, and then again on January 1, 2025, as follows:
- Beginning July 1, 2024, the minimum weekly salary for exempt executive, administrative, and professional employees will rise to $844 per week (up from $684 per week). That works out to $43,888 annually (up from $35,568).
- On January 1, 2025, the minimum salary for exempt executive, administrative, and professional employees increases to $1,128 per week. That’s equivalent to an annual salary of $58,656.
- As of July 1, 2024, the annual salary threshold for employees who don’t meet all the requirements for the executive, administrative, or professional exemptions but are classified as exempt from overtime as “highly compensated employees” increases to $132,964 (up from $107,432). The annual salary threshold will increase again on January 1, 2025, rising to $151,164. To qualify for the highly compensated employee exemption, a white-collar worker must customarily and regularly perform at least one of the exempt duties or responsibilities of an exempt executive, administrative, or professional employee, in addition to meeting the annual salary requirement. (Note: the highly compensated employee exemption isn’t permitted in California, Oregon, or Washington.)
- Increases to these exempt salary requirements will be made every three years after the first increase, to keep pace with future earnings data. The next update is scheduled for July 1, 2027.
For more information, see this DOL webpage covering the new salary requirements.
Tips: Overtime exemptions that require payment on a salary basis must meet both the salary threshold required under federal law and any salary threshold required by state law (whichever salary is higher). In California and Washington, the current exempt salary thresholds are already higher than the increased federal salary levels for 2024 and 2025 (California is currently $1,280 per week, $66,560 per year; Washington is currently $1,302.40 per week, $67,724.80 per year). In these two states, exempt salaries must continue to meet the state salary threshold. Idaho, Montana, and Oregon employers should follow the new federal salary thresholds above. (Even though Oregon’s minimum wage is increasing on July 1, 2024, as we previously reported, Oregon’s minimum salary threshold for exempt employees will still be lower than the new federal minimum salary threshold for exempt employees.)
You should review all of your exempt workers’ salaries to determine which positions may be impacted by these increases to the minimum salary requirements. For exempt employees who aren’t being paid enough to satisfy the relevant salary threshold, you will need to decide whether to increase their salary by July 1, 2024, to maintain their exempt status, or change their status to nonexempt, making them eligible for overtime. Keep in mind that in order to qualify for the executive, administrative, or professional exemptions, employees must meet certain job duties tests in addition to being paid on a salary basis. We will be updating our Legal Guides, When Is an Employee Exempt Under Federal Law?, Salary Basis Test for Overtime Exemptions, and State Laws on the White Collar Exemptions from Overtime, with the new minimum salary requirements.
