Nonprofit Resources

New Department of Labor Overtime Rule for Exempt Employees Finalized

A new Department of Labor rule that increases the salary thresholds required to exempt a bona fide executive, administrative, or professional employee from federal overtime pay requirements has been finalized. You can read the administration’s press release announcing the new rule here and the text of the new rule here.

Effective July 1, 2024, the salary threshold will increase to the equivalent of an annual salary of $43,888, based on the methodology used by the prior administration in the 2019 overtime rule update. The rule’s new methodology will take effect on January 1, 2025, at which point the threshold will increase again, to $58,656.

The new rule will also adjust the threshold for highly compensated employees. Up to 10% of the salary amount may be satisfied by the payment of nondiscretionary bonuses, incentives, and commissions (29 CFR § 541.602(a)(3)).

Starting July 1, 2027, salary thresholds will update every three years, by applying up-to-date wage data to determine new salary levels.

There are limited exceptions to the application of the new rules. For example, academic administrative employees may be compensated “on a salary basis at a rate at least equal to the entrance salary for teachers in the educational establishment by which the employee is employed” (29 CFR § 541.600(e)).

Note that this new rule does not change the long-standing rule that ministers are exempt from the application of the overtime rules under the Fair Labor Standards Act. The new rule primarily updates the dollar threshold, which was last updated in 2019.

Please contact us with any questions.

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