UPDATE - 11/18/2024
On November 15th, 2024, the U.S. District Court for the Eastern District of Texas blocked the increase in salary thresholds for exempt employees to receive overtime compensation. This means that essentially the salary threshold for exempt employees to receive overtime compensation will go back to $35,568 annually.
This federal blockage leaves employers to make decisions in regard to the with to the employees that met the criteria of the initial increase in July when there was an increase to $43,888 annually.
________________________________________________________________________________________________________________________________________
11/11/2024
On April 23rd, 2024, the US Department of Labor (DOL) announced a pivotal update to overtime protections under the Fair Labor Standards Act (FLSA), raising the thresholds for exempt salaried employees. The ruling has gone into effect on July 1, 2024, impacting millions of workers and businesses nationwide. The second wave of adjustments will come January 1, 2025 which are likely to affect your business. Here’s what you need to know:
What’s Changing?
- New Salary Thresholds: The DOL has set the new standard salary level for exempt employees at $844 per week (equivalent to $43,888 annually as of July 1, 2024). This threshold will increase again to 1,128 per week ($58,656 annually) on January 1, 2025, ensuring that more salaried workers receive overtime pay.
- Highly Compensated Employees (HCE) Adjustment: The total annual compensation for HCEs has also risen starting at $132,964 annually on July 1, 2024, and increasing to $151,164 annually on January 1, 2025. This update redefines which employees qualify for exemption from overtime based on their compensation.
- Automatic Updates: To maintain relevancy with wage data, these thresholds will now be automatically updated every three years beginning July 1, 2027. This change ensures that salary levels remain in line with the economic conditions, offering greater consistency and predictability.
What this Means for Your Business
These changes, which the DOL estimates will benefit around 4 million workers, emphasizes the need for employers to reassess payroll practices. Businesses with salaried employees close to or below these new thresholds will need to determine the impact on staffing and budgeting. Reclassifying positions, adjusting budgets, or considering staffing adjustments may be necessary to align with the new requirements.
How to Prepare for Compliance
To navigate these adjustments smoothly, consider the following steps:
- Review Salaried Positions: Identify employees affected by these new thresholds and adjust classifications where necessary.
- Budget for Overtime: If reclassification isn’t feasible, prepare to manage potential overtime costs for newly eligible employees.
- Inform Your Team: Clear communication about the changes will prevent misunderstandings and ensure a smooth transition.
Supporting Our Investors
At the Eau Claire Area Chamber of Commerce, we are committed to helping you stay informed and compliant. While we are not the experts in this field, we are happy to assist in connecting you to them. Additionally, we are planning to have a speaker at our annual Human Resource Conference that will speak on these new overtime rules. We encourage anyone interested to attend.
To stay informed about the latest developments in workforce regulations, you can visit the DOL’s official page!