Thank you to our partners at The Compliance Center for this update

Defying expectations, the U.S. Department of Labor’s proposal to increase the exempt salary threshold has gone into effect as of July 1, 2024. This marks a significant update to the Fair Labor Standards Act (FLSA) salary threshold, increasing it from $35,568 to $43,888 annually. An additional increase is scheduled for January 2025, raising the threshold to $58,656.

These updates aim to match inflation and cost-of-living changes, ensuring fairer compensation for employees. As HR professionals and company leaders, it is crucial to reassess employee classifications to ensure compliance with the new regulations, which may involve reclassifying certain salaried employees as non-exempt and making them eligible for overtime pay.

This regulatory change presents both opportunities and challenges. Employees earning below the new thresholds will benefit from fairer compensation and better work-life balance. However, businesses, especially small enterprises, might face increased payroll expenses and the need to adjust their workforce management strategies.

HR departments must develop comprehensive plans to transition smoothly into this new framework. This includes updating payroll systems, communicating changes to employees, and potentially restructuring roles and responsibilities. Proactive measures will be key in navigating these changes effectively, maintaining compliance, and supporting both employee satisfaction and business efficiency.

It is also important to note that there are still pending legal challenges that have not yet been resolved, with one challenge requesting nationwide injunctive relief. Employers must stay informed about these developments to adapt swiftly to any further changes.

To learn more, please reach out.