Summary of the Recent FLSA Salary Raise
As of July 1, 2024, the Fair Labor Standards Act (FLSA) has implemented a significant update to the salary threshold for exempt employees. Here are the key points of this change:
New Salary Threshold:
Effective July 1, 2024: The salary threshold for exempt employees will increase from $35,568 to $43,888 per year ($844 per week).
Effective January 1, 2025: This threshold will further rise to $58,656 per year ($1,128 per week).
The rule includes provisions for regular updates to the salary thresholds every three years, ensuring they remain aligned with current wage data.
Suggested Steps:
- Determine which are the affected positions: Make decision regarding classifications now! For example – classifications are based on what your employee’s performed duties are, not solely on the Job Description.
- Compliance: Employers must review and adjust their payroll practices to comply with the new salary thresholds.
- Raising salaries: This may involve increasing salaries for employees close to the new thresholds or reclassifying some employees as non-exempt, making them eligible for overtime pay. Either decision carries direct and indirect costs. Raising salaries, will impact future salary increases and the pressure to raise other employees’ salaries higher up the organizational chart.
- Increased Costs: The changes may result in increased labor costs as more employees become eligible for overtime pay. Employers need to plan for these adjustments to manage their budgets effectively.
- Develop employee communication strategy to implement the changes as of July and Jan 2025.
- Communicate to leadership, update policies, and Job Descriptions.
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For more detailed information and ongoing updates, you can refer to the U.S. Department of Labor’s [official announcement] (https://www.dol.gov/newsroom/releases/whd/whd20230701)
