By the KMA Team
The U.S. Department of Labor (DOL) recently announced its Final Rule raising the salary threshold for exempt employees. The final rule will increase the standard salary level and the highly compensated employee total annual compensation threshold on the rule’s effective date on July 1, 2024, and on January 1, 2025, when changes in the methodologies used to calculate these levels become applicable.
These scheduled increases are displayed below.
The rule also calls for automatic increases to the minimum salary level every three years, which is expected to begin on July 1, 2027. Note that some states have a higher minimum salary level than the federal level. In these cases, the employer must follow the state minimum salary level.
Attempts in the past to increase the exempt salary threshold at the federal level have not been successful, so it is a possibility that the final rule may not go into effect. However, July 1, 2024 is rapidly approaching, and employers should start preparing now by taking the following actions:
- Determine if all employees who are classified as exempt meet the standards required under the FLSA.
- Identify any exempt employee currently earning less than the new minimum salary levels.
- For those employees who do not meet the new salary thresholds, decide whether to reclassify them as non-exempt OR raise salaries to the minimum levels.
- Have an action plan in place. We might not have a final answer from the DOL until weeks, or even days, before the deadline.
As always, reach out to team at KMA if you need additional guidance and support.