New Overtime Rule Increases Salary Thresholds For Exempt Employees

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Under federal employment law, “nonexempt employees” are eligible to receive overtime pay when they work more than 40 hours in a week. Some employees are exempt from overtime pay rules, meaning they’re not eligible to receive overtime pay even when they work more than 40 hours.

For example, a worker might be exempt if they meet a certain minimum salary threshold. The Biden-Harris administration recently announced an overtime law change that increases the amount of money workers must earn annually to qualify as exempt.

Understanding the new salary thresholds is important for workers throughout the nation. Depending on how much you earn and other relevant factors, you may have reason to file a wage theft case against an employer who’s failed to pay you for overtime work you’ve done.

What Are The New Salary Thresholds?

The new salary thresholds for overtime-exempt employees are as follows:

  • $43,888, starting on July 1, 2024
  • $58,656 on January 1, 2025

These employment law changes will also affect how salary thresholds increase going forward. Beginning July 1, 2027, the federal government will apply current wage data to properly update salary thresholds every three years.

The purpose of regular updates is, in part, to ensure that the overtime law in this country continues to serve its purpose. Just as wages should increase to keep pace with inflation, so should the salary thresholds for workers to qualify as exempt or nonexempt.

Who Does This Ruling Apply To?

The new ruling will apply to any employees working for companies to whom the Fair Labor Standards Act (FLSA) applies. Generally, the FLSA applies to employers whose annual sales or business are not less than $500,000 or who are engaged in interstate commerce.

It’s also vital to understand that employment laws can vary from one state to another. Even if your employer has to comply with federal law, they may also need to comply with additional state-level requirements. If you think you’ve missed wages because an employer has violated a state law, federal law, or both, strongly consider speaking with an attorney for more information about your potential options.

Exempt vs. Nonexempt Employees

Per the FLSA, employees covered under the Act must receive overtime pay when they work more than 40 hours in a week. The rate-of-pay should be equal to or greater than time and one-half their typical hourly rate.

That doesn’t mean every employee who works more than 40 hours in a given week is eligible to receive overtime pay. Some employees are considered “exempt.” An exempt employee is typically a salaried worker whose pay doesn’t increase even when they work more than 40 hours in a week.

A worker must meet certain criteria to qualify as exempt. For example, the nature of their job must usually involve some form of “professional,” “administrative,” or “executive” work. They must also meet certain minimum pay criteria.

Per these recent developments, for someone to be an exempt employee, their annual salary must be equal to at least the new salary threshold for the year. Even if a worker meets most or all of the other criteria necessary to qualify as exempt, they will still be classified as nonexempt if they earn under the new thresholds. 

The thresholds provide you with an easy way to determine if an employer is violating overtime law. If your annual salary is equal to or greater than the applicable threshold, you may not be eligible to receive overtime pay, depending on whether you meet other exemption criteria. However, if you earn less than the threshold, you are virtually always entitled to overtime pay when you work more than 40 hours in a week.

Further Reading: What is the Difference Between Exempt and Non-Exempt Employees?


Speak With an Employment Lawyer

It shouldn’t be an employee’s responsibility to confirm their employer is abiding by these new employment and overtime law changes. Unfortunately, some employers don’t make an effort to adjust their policies to changes in the law.

Some may be delinquent. Even if they’re not acting maliciously, they’re failing to update their policies simply because they’re not being proactive about complying with rules and regulations. That said, some employers may not comply with the law because they know their employees may be unfamiliar with it. An employer could attempt to take advantage of your lack of familiarity with the law by not paying you for overtime work despite the fact that you earn less than the new threshold.

One of the best ways to navigate these issues is to speak with a legal professional. If you think an employer is violating your rights, strongly consider taking the Free Case Evaluation to speak with an independent employment law attorney who subscribes to the website and may help with your case.