The U.S. Department of Labor (“DOL”) announced on April 23, 2024, that it will raise the Fair Labor Standards Act’s (FLSA) minimum annual salary threshold in a series of two steps. First, on July 1, the threshold will increase from $35,568 to $43,888 per year. Then, on January 1, 2025, it will increase to $58,656. The FLSA mandates that employers pay overtime pay to workers who work more than 40 hours each week, unless the worker 1) earns the minimum salary threshold and 2) performs job duties that qualify for specified exemptions. The new increased salary threshold will force employers to either increase salaries or pay overtime for previously exempt workers earning less than the new threshold, regardless of the worker’s job duties. The DOL also announced that the automatic exemption afforded to highly compensated workers will increase from $107,432 to $151,000. It is predicted that, in its first year, the new rule will result in a transfer of about $1.5 billion from employers to workers as employers grapple with whether to increase salaries or pay overtime premiums. Business groups are expected to fight the new rule and legal challenges are almost guaranteed.
