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DOL Raises Minimum Salary Threshold for Overtime Pay

DOL Raises Minimum Salary Threshold for Overtime Pay

The Department of Labor (DOL) issued earlier today its final rule altering the Fair Labor Standards Act overtime regulations. The rule includes two-tiered increases to the minimum salary threshold and the threshold for highly compensated employees (HCE). The rule also includes automatic updates to both thresholds.

The minimum salary threshold will be increased to $43,888 on July 1, and then to $58,656 on January 1, 2025. This represents at least a 60% increase over the current salary threshold of $35,568.

Workers earning a salary under the threshold qualify for overtime pay if they work more than 40 hours in a week.

DOL clarified that the first increase updates the minimum salary threshold using the department’s current methodology, which was used in the 2019 Trump-era rulemaking to set the current standard. The second increase then implements the department’s new preferred methodology, which sets the minimum salary threshold to the 35th percentile of weekly earnings of full-time salaried workers in the lowest wage Census region.

Worker applies lubricant to large bearing.

The HCE threshold will be raised to $132,964 on July 1, 2024, and then to $151,164 on January 1, 2025 — a 41% increase from the current threshold of $107,432. The first threshold is based on the current methodology, while the second threshold is set to the 85th percentile for full-time salaried workers nationally.

The final rule also implements automatic updates to both the minimum salary threshold and the HCE threshold, both of which will be increased every three years.

Employer organizations are expected to file court challenges to the new overtime rule, but the phased-in implementation may impact how litigation is pursued.  The groups also intend to ask DOL to extend the July 1 implementation date to September 1.