DOL Finalizes Rule Regarding Salary Threshold for Exempt Status

	Martin Kappenman

Submitted by Martin D. Kappenman and David E. Goldman

Martin is a Shareholder at Peters & Kappenman, P.A., a firm representing employers in a full range of employment law issues and litigation in Minnesota.

Salary Threshold Increases

On April 23, 2024, the U.S. Department of Labor (DOL) announced its final rule increasing the salary threshold for overtime exemptions. Currently, there are numerous “exemptions” for employees to be classified as exempt from overtime pay requirements under the Fair Labor Standards Act (FLSA). The so-called “white collar” exemptions apply to executive, administrative, or professional employees who meet a certain salary threshold and perform certain duties. In addition, the “highly compensated employee” exemption applies to certain employees who are “highly compensated”. Both the “while collar” and “highly compensated employee” exemptions have seen their salary threshold’s rise with the DOL’s latest rule. 

Currently, the salary threshold for the “white collar” exemptions is $684 per week (roughly $35,568 per year). On July 1, 2024, this amount is set to increase to $844 per week (roughly $43,888 per year). Additionally, on January 1, 2025, this amount is set to increase further to $1,128 per week (roughly $58,656 per year. Employees still must meet the “primary duties” test to be classified as a “white collar” employee.

The salary threshold for the “highly compensated employee” exemption currently requires employees to earn a salary of $107,432 to be exempt from overtime requirements. This amount is set to increase to $132,964 per year on July 1, 2024, and $151,164 per year on January 1, 2025. Employees still must “customarily and regularly” perform executive, administrative or professional duties to be classified as a “highly compensated” employee.

Practical Considerations

Employers should perform an internal audit of their employees to determine who meets these salary thresholds. Employers should determine if they will need to reclassify or raise the salary of any workers based on the above rule changes. Note, the rule is still subject to legal challenge and implementation may be put on hold by court action.