On Tuesday, April 23, the United States Department of Labor issued its anticipated Final Rule on the Fair Labor Standards Act salary requirements for overtime exemption.

The Final Rule, which will likely face legal challenges, increases the salary threshold for white-collar overtime exemptions. Effective July 1, 2024, the minimum weekly salary for exempt status will increase to $844 ($43,888 annually) and the highly compensated salary threshold will increase to $132,964 annually.

The salary thresholds will increase again on January 1, 2025, with the minimum salary for exempt status upped to $1,128 weekly ($58,656 annually) and the highly compensated salary threshold upped to $151,164 annually.

The increases are expected to impact approximately three million employees and are likely to have the greatest impact on industries such as retail and food service. The increases will force impacted employers to either increase salaries or move employees into non-exempt status and begin paying them overtime.

This Final Rule is almost certain to face challenges in federal court, including potentially the issue, teased by the Supreme Court in a recent opinion, of whether the DOL’s inclusion of a salary basis requirement for the white-collar exemptions is proper under the FLSA.

In the meantime, employers should exam the salaries of their exempt employees to determine whether they will meet the new thresholds.