The U.S. Department of Labor (DOL) has set increases to the minimum salary for many exempt employees. This is a significant change that will impact businesses nationwide. Here’s a breakdown of what you need to know:
The Increase:
The new rule implements a two-step increase for exempt executive, administrative, and professional employees (EAP):
- Current: Minimum salary currently is $684 per week ($35,568 annually).
- Effective July 1, 2024: Minimum salary goes up to $844 per week ($43,888 annually).
- Effective January 1, 2025: Minimum salary rises further to $1,128 per week ($58,656 annually).
Who’s Affected?
This primarily applies to salaried EAP employees. However, there are some exceptions:
- Teachers, lawyers, and doctors: Federal law exempts them from these minimums, but state minimums may still apply.
- School administrators: Minimums specific to their roles might exist.
- Computer employees: They can be paid hourly (at least $27.63 per hour, unchanged by the rule) or on salary (following the EAP minimums).
Highly Compensated Employees (HCE):
The minimum salary requirements for HCE also increase:
- Effective July 1, 2024: Minimum total annual compensation goes up to $132,964.
- Effective January 1, 2025: Minimum total annual compensation rises again to $151,164.
Important Considerations:
- State laws: If your state mandates a higher minimum salary, that takes precedence.
- Future updates: The rule establishes automatic adjustments every three years, starting in 2027.
- Potential legal challenges: Previous attempts at significant salary minimum changes faced legal roadblocks. This rule might see similar challenges.
What Employers Should Do Now:
- Review exempt employees’ salaries: Ensure they meet the new minimums for their classification.
- Consider reclassifications: If some employees fall below the minimum, reclassify them as non-exempt and provide them with appropriate benefits (minimum wage, overtime pay).
Resources:
If you currently subscribe to HR Support Center, the following resources are available to help you navigate these changes:
- FLSA Changes Decision-Making Guide: Assists with determining the best course of action for your business as the DOL increases minimum salary.
- FLSA Changes Implementation Guide: Provides guidance on communicating changes, cost considerations, and employee morale.
These guides are available on the HR Support Center platform.
If you’d like to review the regulations yourself, they are available here. The relevant changes start on page 130 of the downloadable PDF.
Stay informed! This is a major development for employers. By understanding the new regulations and taking proactive steps, you can ensure compliance and minimize disruptions to your workforce. If you have further questions, feel free to contact us!
