Starting January 1, 2025, the salary threshold for overtime exemptions under the Fair Labor Standards Act (“FLSA”) will increase again. Employers must ensure compliance with these changes. The FLSA mandates that covered employers pay overtime at time-and-a-half for hours worked over 40 in a week, but certain employees—specifically bona fide executive, administrative, or professional employees—are exempt from minimum wage and overtime provisions under the “white-collar” exemption. Additionally, there is a separate exemption for highly-compensated employees (“HCE”).
The FLSA outlines that to qualify for the executive, administrative, or professional (“EAP”) exemptions, employees must be paid on a salary basis, meet a minimum salary threshold (which will increase to $1,128 per week, or $58,656 annually, in 2025), and perform duties specific to the exemption. The HCE exemption will also see an increase to $151,164 annually. These changes are part of a broader rule from the U.S. Department of Labor that includes provisions for future adjustments every three years.
Employers, especially in retail, restaurants, non-profits, and service industries, should prepare for these changes, as they may affect many salaried employees, particularly those in lower-income areas. For those employees earning below the new thresholds, employers will need to either pay overtime or raise salaries to meet the requirements. This adjustment could create ripple effects in wage structures to prevent wage compression, making it crucial for employers to start planning now to address the implications of these wage increases.
To ensure compliance with the FLSA and protect your business, contact us at info@mnklawyers.com.
