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Employer Update – Immediate Action Required

The U.S. Department of Labor has increased the Fair Labor Standards Act’s (FLSA’s) annual salary-level threshold from $35,568 to $58,656, fully effective as of January 1, 2025, for white-collar exemptions to overtime requirements. Effective July 1, 2024, the salary threshold will increase to $43,888.

What this means for employers – in order to qualify for the overtime exemption, employers will need to pay their salaried exempt employees no less than $43,888 annually starting July 1, 2024 and then increase that amount to $58,656 starting January 1, 2025. Thereafter, there will be automatic increases to the salary requirement every three years.

Employees whose salaries do not meet the salary requirements will be required to be paid on an hourly basis and eligible for overtime. Employers who have employees who are making less than the salary requirements need to consider whether to increase employees’ salaries (which in some instances could be as much as $23,088 from the current threshold) or convert these employees to hourly non-exempt.

The attorneys at GKH will continue to monitor this development. It is anticipated that there will be legal challenges to the new rule. However, given that the rule goes into effect in just over two months, employers need to start making plans to address the new rule. Specifically, employers must consider whether there will be salary increases and what schedule adjustments need made to avoid significant overtime costs. Careful consideration needs to be given in communications to effected employees; specifically, those employees whose status may be changed from salaried exempt to hourly non-exempt.

Employers who have questions as to the implications of the new rule, should contact the employment attorneys at GKH.


(Jeff Worley practices in the areas of employment law, business law and general litigation. Jeff is a member of the firm’s Advocacy Group and Corporate Practice Group. Jeff also provides training to employers on a wide range of topics.)