You May Be Entitled to Overtime Pay Under The New U.S. Department of Labor Rule!

Effective July 1, 2024, the U.S. Labor Department under the Biden Administration put into effect a new rule that significantly increases the salary level that delineates which salaried workers are entitled to overtime pay protections under the Fair Labor Standards Act (“FLSA”).

Under the FLSA, some workers are exempt from the minimum wage and overtime protections. This exemption applies when: (1) an employee is paid on a salary basis; (2) the salary is not less than a minimum salary threshold amount; and (3) the employee is primarily performing executive, administrative, professional duties, outside sales, and certain computer employees (known collectively as “EAP”).

Beginning on July 1, 2024, salaried workers who earn less than $844 per workweek ($43,888 per year) will become eligible for overtime pay at the rate of time-and-a-half for every hour worked over 40 in a workweek. This is an increase over the former salary threshold of $684 per workweek ($35,568 per year) that was established in 2019 during the Trump Administration.

Moreover, beginning on January 1, 2025, salaried workers who earn less than $1,128 per week ($58,656 per year) will become eligible for overtime pay, no matter whether they are in a job position that primarily requires the performance of executive, administrative, or professional duties under the FLSA.

The final rule also implements automatic increases to the minimum threshold every three years beginning on July 1, 2027.

Additionally, the FLSA exempts certain “highly compensated employees” from overtime protection. The factors that define a highly compensated employee for purposes of the exemption are:

1. The employee earns total annual compensation of $107,432 or more, which includes at least $684 per week paid on a salary or fee basis;
2. The employee’s primary duty includes performing office or non-manual work; and
3. The employee customarily and regularly performs at least one of the exempt duties or responsibilities of an exempt executive, administrative or professional employee.

Thus, for example, an employee may qualify as an exempt highly compensated executive if the employee customarily and regularly directs the work of two or more other employees, even though the employee does not meet all the other requirements in the standard test for exemption as an executive.

The required total annual compensation of $107,432 or more, which includes at least $684 per week paid on a salary or fee basis, may otherwise consist of commissions, nondiscretionary bonuses and other nondiscretionary compensation earned during a 52-week period, but does not consist of credit for board, lodging, or other facilities, payments for medical or life insurance, or contributions to retirement plans or other fringe benefits.

Additionally, the weekly salary amount of $684 must be paid in its entirety. Employers may not use nondiscretionary bonuses and incentive payments (including commissions) to satisfy any portion of the weekly standard salary level for highly compensated employees.

Note that the new rule that went into effect on July 1, 2024, raised the total annual compensation level to $132,964 per year, including at least $844 per week paid on a salary or fee basis. Thereafter, effective January 1, 2025, the new rule will raise the total annual compensation level to $151,164 per year, including at least $1,128 per week paid on a salary or fee basis. As with salaried EAP employees, automatic increases to the minimum threshold will be implemented every three years beginning on July 1, 2027.

Generally, the FLSA minimum wage and overtime protections apply to anyone employed by a business whose annual gross volume of sales made or business done is not less than $500,000. There are some exceptions, so you may want to get legal advice prior to taking any action if you suspect that you are not being paid the correct amount of overtime mandated by law.

Unless an employer acted in good faith, the failure to pay the correct overtime wage entitles an employee to additionally recover liquidated damages in the same amount as the unpaid wages—effectively double the amount of unpaid wages due.

Also, under the FLSA it is a violation for any person to “discharge or in any other manner discriminate against any employee because such employee has filed any complaint or instituted or caused to be instituted any proceeding under or related to this Act, or has testified or is about to testify in any such proceeding, or has served or is about to serve on an industry committee.”

This provision against retaliation applies even if the employee’s work and the employer are not covered under the FLSA.

If you have any concerns about your rights to overtime pay or are having difficulties with any other activity protected by the FLSA listed above, or you have been terminated in retaliation by your employer for reporting illegal or suspected illegal conduct, you should seek legal assistance immediately.