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US DOL Announces the Effective Date of the Long-Await Increases to the Salary Level for Exempt Employees 

As anticipated, the U.S. Department of Labor (DOL) has announced a Final Rule that increases the minimum salary level for certain positions to qualify as exempt under the Fair Labor Standards Act. The minimum salary level will increase in two phases as follows: 

Effective July 1, 2024:  

  • EAP Exemptions. The minimum salary level for those covered under the “EAP” (Executive, Administrative, and Professional) categories will be $844 per week ($43,888 per year).  
  • HCEs. The total annual compensation under the highly compensated employee (HCE) exemption will be $132,964.  
  • Computer Employees. The hourly rate ($27.63) for those classified as Computer Employees will not change; however, Computer Employees who are paid on a salary basis will be subject to the increase under the EAP exemptions. 

Effective January 1, 2025

  • EAP Exemptions. The EAP minimum salary level will further increase to $1,128 per week ($58,656 per year)  
  • HCEs. The total annual compensation under the highly compensated employee (HCE) exemption will increase to $151,164.  
  • Computer Employees. The hourly rate ($27.63) for those classified as Computer Employees will not change; however, Computer Employees who are paid on a salary basis will be subject to the increase under the EAP exemptions. 

The final rule also establishes a method to update earnings thresholds every three years. 

What’s Not Changing?  

While the salary levels are being increased many other aspects of the law remain consistent with the current regulations including: 

  • The hourly rate ($27.63) for those classified as Computer Occupations will not change; however, Computer Employees who are paid on a salary basis will be subject to the increase under the EAP exemptions as outlined above; 
  • The duties tests;  
  • Exclusion of certain occupations from the minimum salary level requirements such as teachers, lawyers, and doctors; 
  • Exclusion of board, lodging, or other facilities from the salary level; and 
  • The ability to satisfy up to 10 percent of the new salary level through the payment of nondiscretionary bonuses and incentive payments, including commissions paid annually or more frequently; and
  • HCEs must receive at least the minimum salary level per week on a salary or fee basis, after which the remainder of the employee’s total annual compensation may include commissions, nondiscretionary bonuses, and other nondiscretionary compensation.  

For more information, refer to Final Rule: Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees

Next Steps for Employers 

Despite the possibility of legal challenges that could impact the salary levels and/or the effective dates, employers should take steps to prepare for the first phase of these changes. 

Review your workforce to determine which employees classified as exempt under the EAP or HCE categories earn between the old threshold and the new threshold and develop a plan for compliance that will include either increasing the salaries of affected employees to meet the new minimum salary level and remain exempt or reclassifying employees as non-exempt, making them eligible for overtime pay for hours worked over 40 per week.  

Since the salary level increases are only six months apart, it may be prudent to evaluate salary levels based on the January 1, 2025 minimum of $1,128 per week. 

In addition, you must be mindful that the salary level is just one part of the exemption test and ensure that exempt employees also meet the “duties test,” meaning their job duties must primarily involve executive, administrative, or professional functions. You must also ensure that you comply with the salary basis requirements, meaning, exempt employees regularly receive a predetermined amount of compensation each pay period on a weekly, or less frequent, basis and this amount is not reduced because of variations in the quality or quantity of the employee’s work. Additional information on exemptions and these requirements is available on the  DOL’s website. 

Multistate employers must also consider applicable state laws that may require higher salary levels than those proposed under this federal rule or whose standards for the duties of an exemption require additional factors for classification. Currently, Alaska, California, Colorado, Maine, New York, and Washington have higher salary level requirements for certain exemptions. Specific to Maine, the federal salary level will be greater than the state requirement come July 1. Where federal and state laws differ, employees must be paid per the law with a higher salary. Furthermore, you should be aware that the practice of satisfying salary level requirements using up to 10 percent of other types of compensation may not be applicable under state laws. 

Employers should consider consulting with legal counsel to ensure compliance with the final rule and navigating potential employee misclassification issues. 

HR Works will continue to monitor this topic and provide additional information as it becomes available. 

How HR Works Can Help 

Current HR Works’ Virtual HR Helpline subscribers have unlimited access to answers to questions about the proposed FLSA exempt salary increase, as well as other HR and employment law topics, and 24/7 access to HR Works’ attorney-reviewed online compliance resource center (Comply), which offers human resources tools, forms, and other compliance resources. Additionally, Virtual HR Helpline subscribers receive two free FLSA Assessments each year (with the option to purchase additional assessments for a fee). The HR Helpline can be reached at hrhelp@hrworks-inc.com or by calling 888-668-1271. 

HR Strategic Services clients may contact their designated HR Strategic Partner for additional guidance and assistance with these changes and/or to request FLSA Assessments. 

Non-HR Works clients may contact us for HR solutions by calling toll-free at 1-877-219-9062 or visiting our website

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.