#TuesdayTips – New DOL Rule Increases Minimum Salary for Exempt Employees: Key Changes Effective July 2024

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Understanding the New DOL Final Rule: Increased Minimum Salary for Exempt Employees in 2024

On April 26, 2024, the U.S. Department of Labor (DOL) announced a significant final rule impacting the minimum salary for many exempt employees. This rule will take effect in two stages. To review the regulations in detail, you can access the changes starting on page 130 of the downloadable PDF here.

Key Changes for Executive, Administrative, and Professional Employees

Under the new rule, exempt executive, administrative, and professional (EAP) employees must be paid at least:

  • $844 per week ($43,888 per year) starting July 1, 2024
  • $1,128 per week ($58,656 per year) starting January 1, 2025

Exceptions to Note

  • Teachers, doctors, and lawyers: These professions are exempt from federal minimum salary requirements but may have different state-specific minimums.
  • Academic administrative employees: School-specific minimums apply.

Specifics for Computer Employees

  • Salaried: Considered part of the EAP group and must meet the new minimums.
  • Hourly: Can be paid at least $27.63 per hour, which remains unchanged by the new rule.

Highly Compensated Employees (HCE)

Employees exempt under the HCE exemption must be paid at least the minimums listed above and receive total annual compensation of at least:

  • $132,964 per year starting July 1, 2024
  • $151,164 per year starting January 1, 2025

State Law Compliance

Employers must adhere to higher state minimum salary requirements if they exceed federal standards.

Future Increases

Starting July 1, 2027, the rule implements automatic updates to minimum salary levels every three years. Employers will receive at least 150 days’ notice before these changes take effect.

Potential Challenges

Previous significant changes to salary minimums by the DOL have faced legal challenges. While the outcome is uncertain, litigation is a strong possibility for this final rule.

Next Steps for Employers

Employers should consider the following actions:

  1. Ensure compliance: Verify that salaried exempt employees meet the new minimum salary requirements for their classification.
  2. Reclassification: Reclassify currently exempt employees as nonexempt if necessary, ensuring they receive the appropriate rights and benefits (e.g., minimum wage and overtime pay).

For detailed guidance, our FLSA Changes Decision-Making Guide and FLSA Changes Implementation Guide are available on our platform. These resources cover cost-neutral pay rates, employee morale, communication of classification changes, and more.

Stay informed and prepared to ensure compliance with these significant updates from the DOL.

#TuesdayTips – New DOL Rule Increases Minimum Salary for Exempt Employees: Key Changes Effective July 2024