Today, on April 23rd, the Department of Labor (DOL) published its final rule regarding “white collar” salary exemptions from overtime requirements under the Fair Labor Standards Act (FLSA). Under DOL’s new rule, to be exempt from overtime, an employee will need make at least $844/week ($43,888/year) beginning on July 1, 2024. This amount will increase to $1,128/ week ($58,658/ year) beginning on January 1, 2025. Furthermore, DOL states that future updates will occur every three years on July 1st. Employees will still need to meet the existing job duties requirements for the “white collar” salary exemptions. These requirements did not change.
Additionally, the DOL’s final rule increases the minimum salary for highly compensated employees. On July 1, 2024, the salary threshold for highly compensated employees will increase from $107,432 to $132,964 and on January 1, 2025, it will increase again to $151,164. To note, “highly compensated employees” are exempt from overtime compensation if they perform at least one exempt duty instead of performing all of the specific “white collar” exemptions. Just to note, this does not apply to all states, including Oregon.
As a reminder, to be exempt from the minimum wage overtime rule under the FLSA's white-collar exemptions, employees generally must be paid on a salary basis, meet a minimum weekly salary, and meet specific exempt job duty requirements. Currently, to be exempt from the minimum wage overtime rule under the FLSA's white-collar exemptions, employees generally must meet a minimum salary threshold of $684/week ($35,568/year).
Given DOL regulations, this overtime rule cannot take effect for 60 days, hence the July 1st effective date. However, it is important note that during this 60-day waiting period, there could be challenges in court. Specifically, it is likely that this proposed rule will face similar challenges as the 2016 proposed rule. In 2016, it was ruled that DOL did not have the authority to set a salary threshold so high that it effectively eliminates the duties tests and that automatic updates to the overtime threshold were unlawful.
Regardless of the potential challenges, Oregon employers should prepare for the rule to pass. Specifically, employers should complete a budget analysis of non-exempt, overtime positions against the new salary exemptions. Employers should be prepared to either switch positions to hourly or salaried non-exempt or to increase the salaries of exempt employees. Positions that need to be moved to non-exempt to comply with this rule will need training on what it means to be non-exempt, such as how to track hours, and rest and meal periods. Additionally, employers should watch out for pay equity issues under Oregon’s Pay Equity law.