Be Ready on July 1: Initial Increase in Salary Level for Exempt Employees to Take Effect  

As we previously reported, on April 23, 2024, the US Department of Labor (DOL) issued a final rule that substantially increases the minimum salary levels for exempt employees under the Fair Labor Standards Act (FLSA). As a reminder, the Final Rule called for a 2-pronged increase in salary level threshold for both the “white collar exemptions” and “highly compensated employees,” first on July 1, 2024 and then again on January 1, 2025 (please see our prior post for further details). Further updates are scheduled to occur every three years thereafter.

Employer and business groups have raised concerns about the nature and methodology of the Final Rule and have challenged the rule on several bases. A collection of business groups filed a lawsuit to block implementation of the Final Rule in the U.S. District Court for the Eastern District of Texas. They have asked for expedited consideration of their complaint. We will continue to keep you apprised of the status of this challenge.

Until then, employers should keep the impending July 1st deadline in mind and make preparations. As we noted in our prior blog, employers should identify those exempt employees whose current salaries do not meet DOL’s new thresholds ($43,880/year or $844/week for white collar exempt employees and $132,964/year with a base of at least $844/week for highly compensated employees). Employers should then assess whether they can maintain employees’ exempt status by increasing their salaries or whether they must convert employees to non-exempt status and comply with applicable overtime pay requirements. These decisions will require careful consideration of financial and budgetary constraints, operational needs, parity among positions and between pay grades, employee morale, and the need to attract high quality candidates with competitive compensation packages.

As we quickly approach the first effective date of July 1, 2024, Lake Effect can help assess your workforce and review your compliance options consistent with your mission, culture, compensation philosophy, and commitment to your employees. Let us help you navigate this challenging new landscape.

Lake Effect is here to answer all your questions about employment laws, regulations, and new agency guidelines. We continue to monitor important legal and HR developments, as well as other information that could impact the workplace. Please watch our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.
 

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