New Rules Increase Minimum Salary Requirement for Paying Employees

06.18.2024

Author:  Attorney Thomas J. Casey

Employers need to review their employees who are paid by salary to see if they satisfy minimum salary requirements.  Certain employees are exempt from FLSA minimum wage and overtime protections if they are employed in a bona fide executive, administrative, or professional capacity as defined by the U.S. Department of Labor.

To be exempt, an employee must generally meet three tests:

1. Be paid a salary that is predetermined and is not subject to reduction because of variations in quality or quantity of work.
2. Be paid at least a specified weekly salary level.
3. Primarily perform executive, administrative or professional duties as described in U.S. Department of Labor regulations.

Under new rules adopted by the U.S. Department of Labor under the Fair Labor Standards Act (FLSA) on April 23, 2024, the minimum weekly salary requirement is $844.00 per week ($43,888.00 annually) up from $684.00 per week ($35,568.00 annually).  This change is effective July 1, 2024.

Starting January 1, 2025, the minimum weekly salary requirement is $1,128.00 per week ($58,656.00 annually).  There will be future updates of these levels on July 1, 2027 and every three years after.

If employees on salary do not qualify for salary based on the above test, the employer must follow overtime rules and pay overtime on any hours over 40 hours in a week.  Having your employees punch a clock or track their time is the best way to ensure the employees are paid accurately.

The exemptions described above apply only to “white-collar” employees who meet the salary and duties tests set forth in the Department of Labor regulations.  The exemptions do not apply to manual laborers or other “blue collar” workers who perform work involving repetitive operations with their hands, physical skill and energy, non-management employees in production, maintenance, construction and similar occupations, such as carpenters, electricians, mechanics, plumbers, iron workers, craftsmen, operating engineers, long shoreman, construction workers and laborers.  Those employees must still be paid overtime wages.

The exemptions also do not apply to police, fire fighters, paramedics and other first responders.

For those employees who fall within the exemptions (are exempt from overtime), their wages will need to be adjusted to the minimum salary requirements as set forth above if they are not already meeting that minimum.

Please consult with an attorney at Curran, Hollenbeck & Orton, S.C. if you have any questions regarding these new requirements.