U.S. Department of Labor Releases Overtime Rule

On April 23, 2024, the U.S. Department of Labor’s Wage and Hour Division (DOL) announced a final rule that raises the salary threshold to qualify for certain overtime exemptions under federal law. The rule will take effect on July 1, 2024. You can read the full rule by clicking here.

The so-called “overtime rule” updates and revises the regulations issued under the Fair Labor Standards Act, which exempts from minimum wage and overtime pay requirements executive, administrative, and professional (EAP) employees.
 
To fall within the EAP exemption, an employee generally must meet three tests:

1. be paid a salary, meaning that they are paid a predetermined and fixed amount that is not subject to reduction because of variations in the quality or quantity of work performed;
2. be paid at least a specified weekly salary level; and
3. primarily perform executive, administrative, or professional duties, as provided in the Department’s regulations.

 
The Department’s regulations require EAP employees to be paid at least a minimum salary amount to be exempt from the Fair Labor Standards Act’s minimum wage and overtime requirements. This new rule increases the standard salary level for exemption and the total annual compensation requirement for highly compensated employees, as detailed here.
 
HCAOA members should review their classification policies and the salary levels of their employees to determine if they are impacted by this new rule. Understanding the ramifications of this complex rule is difficult. If you have doubts about whether this rule affects your business, you should consult with an experienced labor attorney.
 
HCAOA will keep you updated about this rule as more information becomes available.