DOL Releases Final Overtime Exemptions Rule

On April 23, 2024, the United States Wage and Hour Division of the Department of Labor (DOL) released a final rule titled “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees.” This rule becomes effective on July 1, 2024, and it updates and revises the provisions of the Fair Labor Standards Act (FLSA) that exempt certain employees from minimum wage and overtime requirements.

The final rule focuses on three main tests that determine whether an employee is exempt from FLSA minimum wage and overtime requirements:

Salary Basis Test: To be exempt, an employee must be paid a predetermined and fixed amount that is not subject to reduction based on variations in work quality or quantity.

Salary Level Test: The salary paid to the employee must meet a minimum specified amount. The final rule increases the salary level test amounts but does not modify the salary basis test or the duties test provisions.

Duties Test: The employee must perform executive, administrative, or professional duties.

The following table outlines the current and future salary level test amounts for exempt employees:

Employers should review their compensation practices and ensure compliance with the updated salary thresholds to avoid potential violations of the FLSA. The final rule aims to protect workers’ rights and promote fair compensation for employees across various industries.

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Source: ADP

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