Employees who qualify as exempt are not covered by the Fair Labor Standards Act (FLSA) and thus not entitled to overtime pay. However, the minimum salary required to meet the definition of an exempt employee may increase substantially in 2024, because the U.S. Department of Labor (USDOL)'s proposed rules would increase the minimum salary threshold from $684 per week ($35,568 annualized) to at least $1,059 per week ($55,068 annualized). The new figure reflects the 35th percentile of weekly earnings of full-time salaried workers in the lowest-wage census region, currently the South. The highly compensated employee exemption salary threshold would also increase, from $107,432 to $143,988 per year, to reflect the 85th percentile of full-time salaried workers nationwide. The proposed rules would also require automatic increases in salary thresholds every three years.
Though not certain, the USDOL predicts that the final rules will be issued in April 2024.
Employers need to remember that while the minimum salary threshold is necessary for an employee to qualify as exempt, it is not sufficient. Exempt positions also need to meet one of the so-called white collar job duties tests. See the US Department of Labor’s Fact Sheet 17A for more details.