Changes to Overtime Exemption Rule by Ted Storer

The United States Department of Labor issued a new rule related to overtime that could impact many employers in our area.  To be exempt from overtime, most employees must meet a duties test AND a salary level.  The duties tests are usually described as Administrative, Executive and Professional (EAP) exemptions.  The new rule increases the salary level necessary to exempt an EAP employee from earning an overtime premium.

The salary increase for EAP exemptions occurs in two steps as follows:

By July 1, 2024 – employees must be paid $844 per week or $43,888 annually.

By Jan 1, 2025 – employees must be paid $1,128 per week or $58,656 annually.

If an employee does not meet BOTH the EAP duties test and this new salary level, the employee is entitled to an overtime rate for any hours that are worked in excess of 40 hours in any work week.

Some employees are also exempt based primarily on their salaries under the Highly Compensated Employee exemption.  The rule also increases the salary level for an HCE as follows:

By July 1, 2024 – employees must be paid $ 132,964 annually.

By Jan 1, 2025 – employees must be paid $ 151,164 annually.

A link to the DOL Labor Blog describing the new rule can be found here: What the New Overtime Rule Means for Workers | U.S. Department of Labor Blog (dol.gov)

If you have any questions about how this new rule impacts your business, you should contact your Beers Mallers counsel.  Additional information about the relevant duties test can be discussed as well.