July 2024 Brings New Overtime Pay Rules from the DOL
The Department of Labor is updating the Fair Labor Standards Act rules that define which executive, administrative, professional, outside sales, and computer employees are exempt from overtime pay requirements. Effective July 1, 2024, the U.S. Department of Labor (DOL) will implement these changes. The salary threshold for exempt employees ineligible for overtime pay has been $35,568 per year, but it will increase on July 1, 2024, to $43,888 annually or $844 per week. The threshold will rise even further in early 2025 to $58,656 yearly or $1,128 weekly.
Overtime Exemption Qualifications
Job duties will continue to determine overtime exemption status for most salaried employees. To qualify for overtime exemption, an employee must meet three specific tests:
Salary Basis Test: The employee earns a stable salary that doesn’t vary based on the quality or amount of work performed.
Salary Level Test: The employee must receive the minimum specified weekly salary.
Duties Test: The employee must primarily perform executive, administrative, or professional duties. Here are some general guidelines for these duties:
- Executive Exemption: An employee manages the enterprise or a department of the enterprise and directs the work of at least two employees. Further, they have the authority to hire or fire employees or can make recommendations for such.
- Administrative Exemption: Performs office or non-manual work related to general business operations, using independent judgment on important matters.
- Professional Exemption: The work requires advanced knowledge in a specialized field acquired through extensive education and training. Examples include teaching, computer analytics, and engineering.
Keep Employees in the Know Regarding Overtime Pay Requirements
These changes ensure that more salaried workers receive fair compensation when working over 40 hours a week. In light of this, we strongly urge employers to thoroughly review their employee classifications and make any necessary adjustments to ensure compliance with the new regulations. It’s also essential to communicate these upcoming changes with employees. Explain the changes and let them know how the new rules will affect their pay structure. Importantly, let them know that the primary goal of these changes is to ensure compliance and fairer compensation for extra hours worked.
Contact MyCPA for Compliance
Our expert CPA team will help your business seamlessly transition to comply with the new DOL overtime rules. We offer reliable tools for tracking employee hours to maintain accurate time tracking, which is essential for compliance. Additionally, we will monitor the impact of the new hourly pay rates. If any employee’s compensation falls short of their previous salary, we can notify you so that you can prevent any financial loss. Contact us today to learn more!
