It is important for every member agency, as well as state associations, to evaluate current employees to determine if they are eligible for overtime pay.
In April, the U.S. Department of Labor (DOL) issued its final rule that alters overtime regulations under the Fair Labor Standards Act (FLSA). The rule includes two-tiered increases to the minimum salary threshold and a threshold for highly compensated employees (HCE).
The first increases will go into effect on July 1, 2024, and will be updated again on Jan. 1, 2025. The final rule also implements automatic updates to both the minimum salary threshold and the HCE threshold every three years.
The Big “I" has created a three-page primer to help educate Big “I" state associations and agency owners about the new requirements. It is important for every member agency, as well as state associations, to evaluate current employees to determine if they are eligible for overtime pay and to work with local counsel to ensure compliance with applicable federal and state laws.
According to the rule, the minimum salary threshold will be increased to $43,888 on July 1, 2024, and then to $58,656 on Jan. 1, 2025. This represents over a 60% increase over the current threshold of $35,568.
The DOL clarified that the first increase to the minimum salary threshold was determined by using the DOL's current methodology, which was used in the 2019 overtime rulemaking to set the current standard. The second increase then implements the DOL's new preferred methodology, which sets the minimum salary threshold to the 35th percentile of weekly earnings of full-time salaried workers in the lowest wage census region.
The HCE threshold will be raised to $132,964 on July 1, 2024, and then to $151,164 on Jan. 1, 2025—a 41% increase from the current threshold of $107,432. The first threshold is based on the DOL's current methodology, while the second threshold is set to the 85th percentile for full-time salaried workers nationally.
The DOL estimates that this rule will expand overtime eligibility to 4 million “white collar" workers once fully implemented in January 2025. An additional 292,900 HCE employees are estimated to become eligible for overtime pay.
For additional information, the DOL produced a webinar to provide an overview of the updated requirements.
Nathan Riedel is Big “I" senior vice president, federal government affairs.
