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Tuesday, April
23, 2024 - TThe U.S. Department of
Labor (DOL) announced today the release of a
final rule raising the minimum annual salary
threshold for overtime pay eligibility. This
primarily applies to executive, administrative,
and professional employees, commonly referred to
as the “White Collar Overtime Exemptions.”
The Fair Labor Standards Act (“FLSA”) is a
federal law that regulates when employees must
be paid minimum wage and overtime. Under the
FLSA, overtime pay, which is due to all
employees who do not fall within a specified
exemption, is one and one-half times an
employee’s regular pay rate for every hour that
is worked beyond 40 hours in a work week. While
hourly workers are generally entitled to
overtime pay, salaried workers are not if they
earn above a certain pay level and supervise
other workers, use professional expertise or
judgment, or hire and fire workers.
Currently, salaried workers making less than
$35,568 annually qualify for overtime pay when
they work more than 40 hours in a week. Starting
July 1, 2024, the threshold will increase from
$35,568 to $43,888 per year. It will then
increase again to $58,656 on January 1, 2025.
The change will be most critical for
employers which are now claiming an overtime
exemption for employees earning more than
$35,568 annually, but less than $58,656
annually. Upon enactment, these employees,
occupying this $23,088 band, would lose their
current status as overtime-exempt.
The
new standard will likely be challenged in court
by affected industry groups including EMA that
have argued that excessively raising the
standard exceeds the Labor Department’s
authority. Unless and until there is court
intervention, employers should prepare as
follows:
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Review salaried
employee classifications to confirm
compliance with new salary thresholds to
remain exempt.
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Review salaried
employee classifications to determine
whether employees should be reclassified as
nonexempt.
-
For employees
reclassified as nonexempt, ensure all hours
worked are properly recorded.
-
For employees
reclassified as nonexempt, review budgets,
set hours expectations, and development
policies for approval of overtime.
Barnes & Thornburg LLP
will keep the Energy Marketers of America
apprised of industry challenges to the Final
Rule.
For additional information, please
contact:
Matt Morgan
mmorgan@btlaw.com
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