Increase to Overtime-Exempt Threshold

The Department of Labor has issued an increase to the overtime exemption threshold of salaried and highly compensated employees (HCEs). Even though the ruling will likely be challenged, employers should identify impacted employees and be ready to implement changes to payroll beginning July 1, 2024.

On July 1, 2024 the weekly/annualized salary threshold will increase from $684/$35,568 to $844/$43,888, and the HCE threshold is increasing from $107,432 to $132,964.

Salaried employees must pass three tests to be considered exempt from overtime compensation. 1) Employees must be paid on a salary or fee basis 2) that exceeds the minimum weekly amount (currently $684) 3) with certain job duties such as performing executive, administrative, or professional (non-manual) work. If the employee meets the HCE threshold amount (currently $107,432), the job duties requirement does not need to be met. Outside sales employees, teacher, clergy, and employees practicing medicine or law do not need to pass salary threshold requirements.

To read more about this ruling on the CLA website, please click here.

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