The Department of Labor Releases Final Rule Increasing Salary Threshold for Exempt Employees

The new rule represents an almost 65% increase in the minimum exempt salary threshold by January 1, 2025 and an increase of almost 40% in the minimum HCE compensation threshold.

According to the DOL, at least 4 million workers are expected to be impacted by the final rule by 2025.

Next Steps for Employers

While legal challenges are likely, employers should not wait to prepare for compliance with the rule’s requirements. The new rule is set to take effect on July 1, 2024, which is little more than one month from now. In preparation for the rule’s imminent changes, now is a good time for all employers with salaried workers to consider taking the following steps:

• Audit the exempt status and salaries for all employees to ensure compliance with the DOL’s final rule and with the exempt requirements overall.
• Decide if the company will increase the salaries of any exempt employees who will no longer satisfy the minimum salary thresholds as of July 1, 2024 or January 1, 2025 or whether the company will alternatively reclassify certain employees as nonexempt and overtime eligible.
• If the company elects to increase salaries or reclassify employees from exempt to non-exempt, companies should take care to comply with any applicable state law notice requirements, such as in New Hampshire, and document the change in writing with the employee, have the employee sign off on the acknowledgement, and place the acknowledgment in their personnel file.
• If any changes are required, be sure to plan the specific timing in light of the July 1 st deadline, which is a Monday and may be mid-pay period for many employers.

Please contact any member of the McLane Middleton Employment Law Practice Group for further guidance on the new rule.