With the U.S. Department of Labor’s recent increases to the minimum salary or fee amount for certain exempt employees, many employers are reviewing the exemption status of their employees. In doing so, employers should be mindful of varying state law requirements, which may be higher than even the newly increased federal thresholds.
Increased salary thresholds for white-collar exemptions under FLSA
In April 2024, the DOL issued final regulations raising the white-collar exemption salary threshold under the Fair Labor Standards Act (FLSA). The first increase under this rule went into effect on July 1, 2024, increasing the minimum salary for the executive, administrative, and professional exemptions to $844 per week (approximately $43,888 per year). Another increase is planned for January 1, 2025—further raising the threshold to $1,128 per week (approximately $58,656 per year)—and automatic increases will commence on July 1, 2027, and every three years thereafter.
While some court challenges continue, the July 1, 2024 increase went into effect as planned for almost every FLSA-covered employer, and the future increases are still scheduled to go into effect. As such, many employers have recently reviewed which employees they consider exempt and, in light of the new rule, how much they are paid. But significantly, federal law does not always provide the only salary threshold that employers must meet to properly classify employees as exempt.
States with higher salary thresholds...
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