This week, the U.S. Department of Labor (DOL) issued a new overtime rule. Find answers to common questions below.

What is the new U.S. DOL overtime rule?

The new U.S. DOL rule raises the salary threshold for salaried employees. Currently, under the Fair Labor Standards Act, workers who are paid a salary less than $684 per week ($35,368 per year) are entitled to overtime for hours worked over 40 in a week.

Beginning on July 1, 2024, that threshold increases to $844 per week ($43,888 per year), which means that salaried workers who makes less than that amount are entitled to overtime for hours over 40 in a week.

Will the salary threshold change over time?

Yes. Another increase is scheduled for January 1, 2025, at which point the threshold will increase to $1,128 per week ($58,656 per year), and the U.S. DOL has scheduled increases of amounts yet to be determined scheduled for July 1, 2027 and every 3 years thereafter.

Are there exceptions to the rule?

Some exemptions under the Fair Labor Standards Act don’t have a salary pay requirement or threshold. Thus, some workers who are properly classified as exempt from overtime regardless of pay, like outside salespeople, will not be eligible for overtime under this rule.

Did the DOL change Highly Compensated Exemption* threshold?

Yes. The current threshold is $107,432 per year, including at least $684 per week paid on a salary or fee basis.
On July 1, 2024, that increases to $132964 per year, including at least $884 per week paid on a salary or fee basis.

On January 1, 2025, the threshold increases to $151,164 per year including at least $1,128 per week paid on a salary or fee basis.

On July 1, 2027, and every 3 years thereafter, the threshold will increase in amounts yet to be determined.

What is the benefit of the new DOL rule?

The new rule allows for more workers to receive overtime pay for their work.

*Per the DOL, a highly compensated employee is someone who:
1. Earns total annual compensation of $107,432 or more, which includes at least $684 per week paid on a salary or fee basis (note: this will change as outlined above)
2. Performs office or non-manual work as their primary job duty; and
3. Customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee.