Executive Letter: Reminder of July 1 Effective Date of DOL New Salary Levels — Pending Court Injunction
By Rose Oswald Poels
As reported in the “Regulatory Spotlight” section of the May 2024 WBA Compliance Journal, the Department of Labor (DOL) issued a final rule to revise the regulations issued under the Fair Labor Standards Act (FLSA) to implement the exemptions from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees. Significant revisions include increasing the standard salary level, increasing the highly compensated employee (HCE) total annual compensation threshold, and adding to the regulations a mechanism that will allow for the timely and efficient updating of the salary and compensation thresholds.
The final rule revises the salary thresholds for the exemption under FLSA referred to as the “white collar” exemption. This exemption is comprised of a salary threshold and a “duties test.” The final rule did not change the current duties test. Under the final rule, as of July 1, 2024, the salary threshold to consider an employee exempt from FLSA overtime rules is raised to $844 weekly, up from $684/week. The weekly salary level will increase again to $1,128 weekly on January 1, 2025.
The final rule also revises the total annual compensation threshold for the HCE exemption. As of July 1, 2024, the annual compensation threshold requirement for the HCE exemption increases to $132,964 annually, up from $107,432/year. The annual compensation threshold under the HCE exemption will increase to $151,164 annually on January 1, 2025.
The final rule provides that future increases will occur for both exemptions every three years, beginning January 1, 2027.
Several lawsuits have been filed against DOL regarding the final rule, including one by the Texas Attorney General who with the filing requested the court to grant an injunction to stay the implementation of the final rule until the court decides the merits of the case. A hearing on the motion is anticipated for late June.
As there has been no court injunction yet to stay the effective date of the final rule, banks need to prepare to implement the adjustments effective July 1. Banks should have identified those employees impacted by the final rule and should consider whether to have those exempt employees who fall below the new salary thresholds reclassified as non-exempt or increase the employee’s salary. WBA will continue to monitor the court case actions and alert the membership of any injunction. Without an injunction, the DOL final rule remains effective July 1, 2024.
The DOL final rule may be viewed at: https://www.govinfo.gov/content/pkg/FR-2024-04-26/pdf/2024-08038.pdf
