Be Prepared - But Wait: Legal Challenge Filed Against the Exempt Employee Salary Threshold Changes Effective July 1, 2024

As the first deadline for the Department of Labor’s new overtime rule approaches, employers should be taking steps to ensure compliance with the rule while also staying up-to-date on the status of recent legal challenges to the rule.

Under the new rule, on July 1, 2024, the annual salary threshold required to exempt a salaried worker from federal overtime pay requirements will increase from $35,568 to $43,888. On January 1, 2025, the salary threshold will again increase to $58,656, and then at least every three years thereafter additional increases will occur. These increases primarily affect employees classified as exempt under the administrative, executive, and professional exemptions.

As expected, a group of businesses have filed a lawsuit to block the implementation of the new rule. The lawsuit was filed in the same Texas federal court that struck down the overtime rules issued by the Obama administration in 2017. Given the timing, it is unknown whether the court will be in a position to stop the rule from going into effect before the July 1 effective date.

Employers should continue to review their exempt positions and be prepared to notify impacted employees, in writing prior to July 1, 2024, of their reclassification to nonexempt status or their increase in salary. Employers should also have a plan on what to do in the event that the new rule is delayed or blocked.

If you have questions about this new rule or any other employment law related questions, please contact one of the Blethen Berens employment law attorneys.