Stay Compliant With DOL Changes to Employee Overtime Rules in 2024

The Fair Labor Standards Act (FLSA) is a federal statute that governs minimum wage, overtime pay, and other matters. It’s responsible for setting many minimum standards that employers across the country must follow. States may set a higher minimum wage within their borders, for example, but they cannot set it lower than the FLSA’s level. 

Certain employees are exempt from the FLSA’s minimum wage and overtime provisions. The Wage and Hour Division (WHD) of the U.S. Department of Labor recently amended its overtime rule to limit certain exemptions. This means that some employees who were exempt from receiving overtime pay before the rule took effect on July 1, 2024 are now eligible for overtime. 

Employers need to understand how the new rule affects them. A comprehensive labor relations software package can help.

What Does the FLSA Require for Overtime?

The FLSA requires employers to pay nonexempt employees overtime for any work that they perform over forty hours in a week. The overtime rate is one-and-a-half times the employee’s regular rate. If an employee earns $20 per hour and works 50 hours in a week, their pay would be:

• $20 per hour for the first 40 hours; and
• $30 per hour for the remaining 10 hours.

The FLSA has numerous exemptions from the overtime requirement. This includes “bona fide executive, administrative or professional” (EAP) employees. The new rule changes the criteria for the EAP exemption.

What Is an EAP Employee?

The EAP exemption applies to any employee who meets the following criteria:

• They receive a salary, rather than hourly wages.
• Their salary is equal to or above a minimum threshold set by the WHD; and
• Their job mainly involves “executive, administrative or professional” duties.

Before the new rule’s effective date, the EAP minimum salary threshold was $684 per week or $35,568 per year. The WHD had not adjusted this amount in some time.

Highly compensated employees (HCEs) are also exempt from overtime pay based on a threshold salary amount and other factors. The HCE threshold amount was $107,432 per year before the new rule took effect.

What Changes Does the New Rule Make?

The new rule's most significant change involves the EAP and HCE minimum salary thresholds. It sets two specific increases in the threshold amounts, with subsequent changes based on data that is available at the time about increases in employee pay. The rule schedules the increases as follows:

These changes expanded employees’ eligibility for overtime pay. For example, a salaried employee in an executive, administrative, or professional position who makes $750 per week would not have been eligible for overtime pay before July 1, 2024. Now, that employee would be entitled to overtime under the FLSA.

Does the New Rule Apply Everywhere in the U.S.?

The FLSA applies to most employers across the country. The new overtime rule, however, represents the WHD’s interpretation of the FLSA’s overtime provisions. The statute itself does not define what constitutes a “bona fide executive, administrative or professional” employee. The WHD has the authority to define those and other terms, but only up to a point.

As often occurs when a federal agency amends an existing rule or adopts a new rule, the new overtime rule is subject to legal challenges. One court has limited the enforceability of the new rule, but the ruling has a very limited impact.

As of August 2024, the new rule is in effect for private employers nationwide. The court order only applies to state government employers in Texas. This could change, but unless or until that happens, most employers must comply with the rule.

Learn How Labor Relations Software Can Help Help Your Business

The FLSA applies to nearly all employers in the country. FLSA violations can result in serious penalties and legal liability. LaborSoft’s labor relations software can help employers stay current on changes in the law and make sure they remain in compliance. Contact us today to schedule a customized demonstration of our software for your business.