Effective July 1, 2024, the threshold amount for employees to be exempt from the Fair Labor Standards Act minimum wage and overtime requirements will be raised from $684.00 per week to $844.00 per week.
In addition, effective January 1, 2025, the threshold amount will be raised to $1,128.00 per week.
No other changes have been made to the analysis of exempt status. This is a good time, however, for employers to review their exempt status positions in order to comply with the new threshold weekly salary requirements.
The FLSA requires that employees be paid at least the federal minimum wage and that they be paid overtime wages for all hours worked in excess of 40 in a workweek. Simply paying an employee a salary does not exempt the position from the FLSA minimum wage and overtime requirements.
Several exemptions from both minimum wage and overtime pay are recognized, commonly referred to as White Collar Exemptions or EAP, bona fide executive, administrative, and professional.
The applicability of each exemption requires compliance with a three part analysis:
- Is the position paid the requisite threshold weekly amount?
- Is the position paid on a salary basis?
- Do the functions of the position meet the duties requirements of the executive, administrative, or professional positions as defined by the FLSA?
In reviewing exempt positions in order to comply with the revised threshold weekly salary amount, we recommend taking this opportunity to review whether the other requirements are met: is the position paid on a salary basis and do the duties of the position fall within the definition of the EAP positions?
In assessing whether the position is paid on a salary basis the manner in which the position is paid is critical. The employee must receive a predetermined amount of compensation each pay period. In addition, the compensation paid cannot be reduced due to variations in the quantity or quality of the work performed. In short – the employee must be paid their full salary for any work week in which they perform work. And beginning July 1, 2024, the weekly salary must be no less than $844.00 per week.
The third test must also be satisfied: does the position qualify under the duties test for exempt positions? An examination of the duties requires a review of the duties of the position – not just the title of the position. The regulations issued by the Department of Labor set out the duties of each exempt position. Comparing the duties of the employer’s positions with the Department’s regulations is the best way to determine whether positions are bona fide exempt.
Lawyers at Vaughan McLean can assist with analyzing positions under the three part test to determine whether they are properly being treated as exempt.
