A recent federal court ruling confirmed that the Department of Labor (DOL) has the authority to set a minimum salary for workers to be exempt from overtime pay. In light of recent U.S. Supreme Court decisions, this lower court’s ruling is arguably surprising and, perhaps, is a sign that lower courts are struggling to work out the full ramifications of the U.S. Supreme Court’s recent anti-regulatory rulings.
This decision means that starting January 2025, employers will need to ensure their employees who are classified as exempt from overtime are earning at least $58,656 per year. This increase from the current $44,000 floor is part of a broader effort to ensure that more employees receive overtime pay unless they meet specific criteria under the “white-collar” exemptions. For California employers, the new salary increase is essentially a non-issue as California’s salary threshold is already much higher than the federal requirement.
For employers, the key takeaways are to:
(a) watch the U.S. federal court’s rulings in key employment areas in the months and years to come and
(b) prepare to update, as needed, policies and procedures in accordance to such rulings.
This includes reviewing employee classifications to ensure compliance, updating payroll systems to reflect potential changes, and communicating any updates to employees and managers. It’s also a good time to conduct broader compensation reviews to ensure pay equity and avoid any compliance issues as the new rule takes effect.
For more information on how this ruling may affect your business or for help with reviewing your employee classifications and compliance, feel free to contact our team at MNK Law at info@mnklawyers.com.
