New Salary Threshold for Exempt Employees

Under the Fair Labor Standards Act, employees are classified as non-exempt or exempt. Non-exempt employees are entitled to overtime pay when they work more than forty hours in a seven consecutive day period. They represent the majority of employees. Exempt employees, on the other hand, are not entitled to overtime pay when they work more than forty hours in a seven consecutive day period. Exempt employees include managers, administrators, and supervisors, as well as certain other types of employees that the US Department of Labor has classified as exempt, such as highly compensated white collar workers. To be classified as an exempt employee, an employee, in general, must pass three tests: (1) the employee must be paid on a salary basis; (2) the employee must meet the salary threshold; and (3) the employee must pass the “duties” test.

Currently, the base salary threshold that must be met to be classified as an exempt employee is $684 per week, or $35,568 per year. Effective July 1, 2024, the base salary requirement will increase to $844 per week ($43,888 per year) for the six month period ending December 31, 2024. Beginning January 1, 2025, the salary threshold will increase to $1,128 per week ($58,656 per year). In addition, the wage threshold for “highly compensated” white collar workers will increase from $107,432 to $132,964 on July 1, 2024. Beginning January 1, 2025, the salary threshold for highly compensated white collar workers will increase to $151,164. The base salary requirement as well as the base salary for highly compensated white collar employees will then be adjusted every three years based on the current wage data.

This update is provided for informational purposes only. It is not intended as legal advice, nor does it create an attorney/client relationship between The Moore Law Group LLC and any readers or recipients. Readers should consult counsel of their own choosing to discuss how these matters relate to their individual circumstances. Reproduction in whole or in part is prohibited without the express written consent of The Moore Law Group LLC.

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