DOL Issues Final Rule on Overtime Eligibility

The U.S. Department of Labor (DOL) released the final rule to update and revise the regulations issued under the Fair Labor Standards Act (FLSA) implementing the exemptions from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees. The final rule identifies a two-step process to begins July 1, 2024 when the threshold will increase from $35,568 to $43,888 per year. It will then increase to $58,656 on January 1, 2025.

Key provisions of the final rule include:

• Expanding overtime protections to lower-paid salaried workers.
• Better identification of which employees are executive, administrative or professional employees who should be overtime exempt. The final rule ensures that those employees who are not exempt receive time-and-a-half pay when working more than 40 hours in a week.
• Providing for regular salary updates to ensure predictability. The final rule establishes regular updates to the salary thresholds every three years to reflect changes in earnings. This protects future erosion of overtime protections so that they do not become less effective over time.

The effective date for this final rule is July 1, 2024. Sections 541.600(a)(2) and 541.601(a)(2) are applicable beginning January 1, 2025.

News release