Introduction
Stay informed about the latest labor department regulations involving salary and overtime with our comprehensive guide to the U.S. Department of Labor’s (DOL) final overtime rules.
Understanding the New Overtime Rule
Following an announcement on April 23, 2024, the DOL introduced its new overtime rule. Designed to increase salary levels for executive, administrative, and professional workers (EAP), as well as highly compensated employees (HCE), the aim is to exempt more employees from overtime.
Effective from July 1, 2024, EAP employees must earn at least $43,888 annually ($844 per week). This amount increases to $58,656 ($1,128 per week) on January 1, 2025.
✅ Success Tip
Employers are allowed to meet up to 10% of the standard salary level with non-discretionary bonuses and incentive payments (including commissions) that are paid annually.
Impact on Employers and Employees
The new rule is set to affect an estimated 1.3 million U.S. workers, making them eligible to receive time-and-a-half pay for hours worked in excess of 40 hours per week.
Employees earning less than $43,888 annually must receive a raise to meet the new threshold amount or be paid overtime, even if classified as a manager or professional. This rule provides an opportunity to extend the benefit of overtime pay to more workers fairly.
Step-by-step Guide for Employers
- Review Job Descriptions & Analyze Your Budget: It’s critical to review exempt employees who earn less than the $43,888 salary threshold and decide whether to increase their annual salary or convert them to non-exempt status. Job descriptions should also be reviewed to ensure they meet the necessary exemption criteria.
- Develop a Communication Strategy: Changes in compensation or hours worked can bring about challenging conversations with affected employees. That’s why it’s essential to have a communication strategy in place.
⚠️ Important
The total annual compensation does not include board, lodging, or other facilities, and does not include payments for medical insurance, life insurance, retirement plans, or other fringe benefits.
Conclusion
Navigating the new DOL overtime rules requires careful planning and a solid understanding of the regulations. Employers need to be proactive to ensure compliance, prevent lawsuits, and maintain employee satisfaction. Stay informed and adapt to these changes to promote a fair and balanced work environment.
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