It’s Finalized, The Department of Labor’s New Salary Rate Exemption.

As was expected, the Department of Labor (DOL) finalized its new rule increasing the “white collar” exemption salary-rate threshold on April 26, 2024.  This new salary threshold is currently scheduled to be phased in with the first threshold increase to $844 per week ($43,888 annually) on July 1, 2024, and then to $1128 per week ($58,656 annually) on January 1, 2025.  Future increases are already planned to automatically update the salary rate threshold every three years, based on the available wage data in those future years.

As previously communicated, the new rule does not propose any changes to the current standard duties test for the administrative, executive, and professional exemptions.  Although no changes are proposed to these “white-collar” duties’ tests, the heightened awareness stemming from issuance of a new rule will put a significant focus on salary exemption classifications, especially for those employee positions currently below or even slightly above the new thresholds.

Although the both the salary amount thresholds and respective phase in dates may still be subject to legal challenges, as of the date of this blog, these changes are still planned to take effect on July 1, 2024, and January 1, 2025.

What actions should you take at this time?

 

1. As noted above, regardless of a position salary level, exempt classified employees also need to satisfy certain duties requirements tests. Thus, it is strongly recommended that employers take this opportunity to scrutinize any positions currently below or around these new salary threshold amounts to ensure they meet the “white collar duties test” for administrative, executive, or professional exemption classification standards.  Aliniti can assist in this review process by utilizing our standardized Fair Labor Standards Act (FLSA) exemption classification work sheet to properly assess whether a positions duties likely do or do not meet these requirements.
2. Establish a preliminary implementation and communication plan on what compensation actions you will take for potentially impacted positions. Potential actions for any positions currently below the new salary minimum threshold would either include:

• Increasing an employee’s salary compensation to a newly required threshold level.
• Reclassifying an employee currently classified as salary paid exempt to hourly paid non-exempt.

Aliniti can assist you with both the position review process and implementation of an action and communication plan.

Aliniti HR Blog – Department of Labor’s New Salary Rate Exemption Is Finalized is intended as an employer reference guide only and not intended to serve as legal advice, therefore any legal questions should be directed to legal counsel.