Federal Salary Threshold Increases to Take Effect in July This Year and January Next Year

2024-09-24 10:28:28

The U.S. Department of Labor (DOL) has announced significant updates to the federal salary thresholds for exempt employees. These changes will be implemented in two phases, taking effect on July 1, 2024, and January 1, 2025, respectively.

Key Updates

Starting July 1, 2024, the salary threshold for the "executive, administrative, or professional employee" exemption under the federal Fair Labor Standards Act (FLSA) will increase from $684perweek\ast \ast (equivalentto\ast \ast$684perweek∗∗(equivalentto∗∗35,568 annually) to $844perweek\ast \ast (equivalentto\ast \ast$844perweek∗∗(equivalentto∗∗43,888 annually). Employees earning below this threshold will no longer qualify for the FLSA's minimum wage and overtime exemptions. On January 1, 2025, this salary threshold will further increase to $1,128perweek\ast \ast (equivalentto\ast \ast$1,128perweek∗∗(equivalentto∗∗58,656 annually).

Additionally, starting on the same dates, the federal annual salary threshold for the "highly compensated employee" exemption will increase from $107,432annually\ast \ast to\ast \ast$107,432annually∗∗to∗∗132,964 annually. On January 1, 2025, this threshold will rise further to $151,164 annually.

The DOL has committed to updating these thresholds every three years, with the next adjustment scheduled for July 1, 2027.

Next Steps

Employers should:

Evaluate the current salaries of exempt employees to identify those affected by the new thresholds;

Consider state-specific requirements that may exceed federal thresholds (particularly in states like New York and California);

Develop plans to adjust salaries or reclassify employees if necessary; and

Ensure payroll systems reflect the new salary thresholds and employee classifications.

These proactive steps will help employers remain compliant with FLSA requirements and ensure employees are appropriately compensated.