Nonprofit Resources
New Department of Labor Overtime Rule for Exempt Employees Finalized
NOTE: On November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the Department of Labor regulation published in April 2024 that changed the salary threshold, thereby nullifying it on a national basis. Learn more here. The November 2024 ruling supersedes the information in the email alert below.
A new U.S 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.
2 Comments
Is there a particular website that we can watch to see if any legal challenges, including requests for injunctions, have been filed against the new DOL overtime rule defining defining and delimiting exempt employees?
Beth,
ECFA’s news alerts can be a good source of information. You can subscribe at https://www.ecfa.org/.
The new rule doesn’t really change anything definitionally about who qualifies as an exempt employee. It only changes the dollar amounts exempt employee’s must be paid to not receive overtime.