As has been expected, and as we addressed at the end of 2023 in our previous blog post, on April 23, the U.S. Department of Labor (“DOL”) at long last issued its final rule raising the salary thresholds for overtime exemptions.

The rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees,” addresses the scope of the carveout for positions deemed to be exempt from the overtime requirements of the Fair Labor Standards Act (“FLSA”). Specifically, the final rule sets into motion increases in the salary threshold that must be met for a position even to be potentially exempt. The salary thresholds are higher in the final rule than they were in the proposed rule.

Beginning July 1, 2024, the salary threshold will increase to $43,888/year from the current level of $35,568/year. Following that, the threshold level will increase to $58,656/year on January 1, 2025. The January 2025 level equates to $1,128/week. The DOL has said that the increased threshold beginning January 1, 2025, will affect some 3 million workers. In addition to the general salary exemption thresholds, the rule will raise the threshold for classification as a highly compensated employee, from the current $107,432 to $132,964 in July 2024 and then to $151,164 in January 2025.

This will not be the last increase – the rule sets forth that automatic updates to the threshold amounts will take place every three years based on the latest earnings data. As has been the case with previous attempts at increases through DOL rules, we anticipate there will be challenges to the rule.

Finally, the rule will not alter the duties necessary for the exemption qualification of a position. And employers should remember that some states have higher salary thresholds for exemption under their state wage-and hour laws.