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On April 23, 2024, the U.S. Department of Labor (DOL) announced a final rule to amend current requirements employees in white-collar occupations must satisfy to qualify for an overtime exemption under the Fair Labor Standards Act (FLSA). The final rule will take effect on July 1, 2024.
NOTE: New York’s Department of Labor (NYDOL) amended its Labor Code last fall to increase the salary threshold executive, administrative, and professional (EAP) employees must meet to qualify for the state’s wage payment exemptions. As of March 13, 2024, EAP employees who earn less than $1,300 per week are subject to the same wage payment protections as other nonexempt employees.
The NYDOL’s yearly increases to the thresholds for executive and administrative employees for the next three years are as follows:
New York City, and Nassau, Suffolk, and Westchester counties:
- $1,200 per week ($62,400 per year) on Jan. 1, 2024
- $1,237.50 per week ($64,350 per year) on Jan. 1, 2025
- $1,275 per week ($66,300 per year) on Jan. 1, 2026
The rest of New York State (areas outside of New York City and Nassau, Suffolk and Westchester counties):
- $1,124.20 per week ($58,458.40 per year) on Jan. 1, 2024
- $1,161.65 per week ($60,405.80 per year) on Jan. 1, 2025
- $1,199.10 per week ($62,353.20 per year) on Jan. 1, 2026
Increased Salary Level for Overtime Exemption
The FLSA white-collar exemptions apply to individuals in executive, administrative, professional, and some outside sales and computer-related occupations. Some highly compensated employees may also qualify for the FLSA white-collar overtime exemption.
To qualify for this exemption, white-collar employees must satisfy the standard salary level test, among other criteria. This salary level is a wage threshold that white-collar employees must receive to qualify for the exemption.
Starting July 1, 2024, the DOL’s final rule increases the standard salary level from:
- $684 to $844 per week ($35,568 to $43,888 per year); and
- $107,432 to $132,964 per year for highly compensated employees.
On Jan. 1, 2025, the standard salary level will then increase from:
- $844 to $1,128 per week ($43,888 to $58,656 per year); and
- $132,964 to $151,164 per year for highly compensated employees.
Automatic Updates for Salary Thresholds
The DOL’s final rule also includes mechanisms allowing the agency to automatically update the white-collar salary level thresholds without having to rely on the rulemaking process. On January 1, 2025, the standard salary level for white-collar employees will increase from $844 to $1,128 per week ($43,888 to $58,656 per year) and from $132,964 to $151,164 per year for highly compensated employees.
Effective July 1, 2027, and every three years thereafter, the DOL will increase the standard salary level. The agency will apply up-to-date wage data to determine new salary levels.
Impact of the Final Overtime Rule on Employers
The first salary level increase in July is expected to impact nearly one million workers, while the second increase in January is expected to affect approximately three million workers. Employers should become familiar with the final rule and evaluate what changes they may need to adopt to comply with the rule’s requirements. Legal challenges to the rule are anticipated, which may delay the final rule’s implementation.
View a list of FAQs regarding the final rule.
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Technology to Track Overtime for Compliance with the Final Rule
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