Understanding the FLSA and the New Overtime Rule

Since 1938, the FLSA has protected workers by ensuring they receive overtime pay for hours worked beyond 40 in a week. However, certain exemptions applied, notably for bona fide executive, administrative, or professional (EAP) employees. These exemptions are based on three criteria:

1. The employee must be salaried.
2. The salary must exceed a minimum threshold.
3. The employee must primarily perform executive, administrative, or professional duties.

Over the years, infrequent adjustments to the salary threshold have diluted its effectiveness because lower salaried employees were still getting exempted from overtime pay. The new overtime rule, effective July 1, 2024, aims to correct this by raising the salary thresholds and restoring some balance and fairness.

Key Changes in the Overtime Rule

1. Increased Salary Thresholds : Starting July 1, 2024, the minimum salary for overtime exemption will be $844 per week, increasing to $1,128 per week on January 1, 2025. This will expand overtime eligibility to many lower salaried workers who were previously exempt.
2. Updates for Highly Compensated Employees : The total annual compensation required for highly compensated employees will rise to $132,964 on July 1, 2024, and to $151,164 on January 1, 2025. 
3. Regular Updates : Starting July 1, 2027, the above salary thresholds will be updated every three years, ensuring they keep pace with inflation and wage growth.

What This Means for Workers and Employers

For workers, this rule change means better compensation for extra hours worked. Employees earning below the new thresholds will now be eligible for overtime pay, ensuring their efforts are fairly rewarded. Testimonials from workers highlight the positive impact, with many expressing relief at finally being compensated for their overtime.

For employers, it's crucial to review and adjust payroll and classification practices. Identifying employees affected by the new thresholds and planning budget adjustments will be necessary to comply with the updated regulations. Employers should also develop communication plans to inform their staff and stakeholders about these changes.

Legal Challenges and Considerations

While the new rule is set to take effect on July 1, 2024, past experience suggests potential legal challenges. Businesses should stay informed about any legal developments and prepare to adapt their strategies accordingly. More importantly, employees need to be diligent. If you’re a salaried employee not meeting the thresholds stated above, then your employer MUST pay you for all overtime hours worked at a wage of time and one-half. 

For nearly a decade, the lawyers at PHL Lawyer have fought for just compensation and unpaid wages for employees who get exploited by their employers. So if your employer isn’t following the new regulations, speak to an attorney at PHL Lawyer to make sure that your rights are protected and your proper wages get paid.