New overtime-pay regulations took effect on July 1, which the U.S. Department of Labor (DOL) passed under the Fair Labor Standards Act. According to a DOL press release, the new rule extends overtime protections for millions of salaried workers.

Effective July 1, workers categorized as executive, administrative or professional employees earning less than $43,888 annually will be eligible for overtime pay. Additionally, the salary level will increase to $58,656 on Jan. 1, 2025, marking a nearly 65% increase from the current salary threshold of $35,568, and beginning July 1, 2027, salary levels will update every three years using up-to-date wage data.

Under the Fair Labor Standards Act, salaried workers classified as executive, administrative, professional, outside sales and computer employees are exempt from overtime pay requirements if a worker earns at or above a defined salary level called the “standard salary.” Under the final rule, salaried workers earning less than the finalized standard salary levels per year will be eligible to receive the standard overtime rate for hours worked over 40 in a workweek.

What does this mean for employers? Follow the new rule immediately.

For reference, the increases are as follows:

• Effective July 1, 2024: the salary threshold for employees who meet the executive, administrative, and professional exemptions will increase from the current level of $684 per week ($35,568 annually) to $844 per week($43,888 annually).  In addition, Highly Compensated Employees must be paid at least $2,557/week on a salary basis ($132,964 annually).
• Effective January 1, 2025, the salary threshold for executive, administrative, and professional employees will increase to $1,128 per week ($58,656 annually). Highly Compensated Employees will need to be paid at least $2,907/week on a salary basis ($151,164 annually).