The Department of Labor recently increased the salary threshold for exempt employees. The current salary threshold is $684 per week ($35,568 annual). On July 1, 2024, that will increase to $844 per week, which is the equivalent of an annual salary of $43,888, for a raise of $8,320. Effective January 1, 2025, the threshold will then increase to $1,128 per week, which is the equivalent of an annual salary of $58,656. Starting July 1, 2027, salary thresholds will update every three years, by applying up-to-date wage data to determine new salary levels.
The Department of Labor estimates this could give over 1 million workers a raise. This change in the law has no effect on hourly workers or salaried workers who currently earn more than $43,888.
If you’re a salaried employee who currently earns less than $844 a week, your employer has two options: increase your salary to the new threshold or pay you an hourly wage and overtime for all hours worked over 40 hours a week. The law only requires that you are paid at least minimum wage and time and a half for all hours worked over 40 hours. If you meet the duties test of an exempt (from overtime) employee, your employer may choose to pay you a salary, or it can pay you an hourly wage plus overtime. There are benefits to the employee and employer to both methods.
For employers, if you’re paying salaried employees below $844 a week, you’ll need to increase their salary on July 1, 2024, or switch the employees to an hourly basis and begin paying overtime.
