Increases to Overtime Salary Thresholds Reversed
On November 15, 2024, a Texas federal court reversed an increase to key salary thresholds under the Fair Labor Standards Act (FLSA) that was set to take effect January 1, 2025. Instead, the exempt salary threshold now reverts to 2019 levels.
The FLSA is a federal law that establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards affecting employees in the private sector and in federal, state, and local governments. One of the key components of the FLSA is the salary threshold for exempt employees—those who are exempt from overtime pay because they perform primarily exempt duties.
Understanding the New Salary Threshold
For employees paid on a salary basis who also perform exempt duties, the required salary threshold to remain exempt from overtime will not increase on January 1, 2025. Instead, salary thresholds are now set at 2019 levels:
- Minimum salary level of $684 per week, or $35,568 annually
- Total annual compensation requirement for highly compensated employees of $107,432 per year.
Employers who may have already acted on the planned increase should carefully consider their response. Given the complexities of wage and hour law, it’s essential for employers to seek legal counsel before making changes or adjustments. The right help may help avoid costly mistakes. By taking these steps, employers can maintain compliance with the FLSA and protect from potential legal and financial consequences.
Author: Jessica Frier, Esq., Director of Employee Benefits Compliance, American Fidelity Corporation
This blog is up to date as of December 2024 and has not been updated for changes in the law, administration or current events.
