The principle that a fair day’s work deserves a fair day’s pay is deeply embedded in the American work ethos. This tenet ensures that every worker’s time is valued and compensated appropriately. One of the bedrocks supporting this principle is the Fair Labor Standards Act (FLSA), which mandates that most workers who clock more than 40 hours in a week receive overtime pay.
In a significant move to reinforce and expand this promise, the Department of Labor has introduced a new overtime regulation, potentially impacting millions of lower-paid salaried workers across the United States. At The Law Offices of Todd M. Friedman, P.C., we believe workers must understand these changes and how they might be entitled to additional pay.
The Importance of Overtime Protections
Overtime protections have been an integral part of the FLSA since its inception in 1938. These protections were established not only to prevent worker exploitation but also to benefit workers’ families and the broader community. By ensuring that workers are not overworked and underpaid, strong overtime protections help build and sustain America’s middle class. The recent regulatory changes are a step towards restoring these protections for a larger segment of the workforce.
Understanding the EAP Exemption
Under the FLSA, some workers are specifically exempt from its minimum wage and overtime protections. These exemptions typically apply to bona fide executive, administrative, or professional (EAP) employees. For an employee to qualify for the EAP exemption, three primary criteria must be met:
- The employee is paid a salary.
- The salary is not less than the minimum salary threshold.
- The employee primarily performs executive, administrative, or professional duties.
Between 1938 and 1975, the Department of Labor increased the minimum salary requirement for the EAP exemption every five to nine years. However, the infrequency of these updates since 1975 has eroded the real value of the salary threshold, diminishing its effectiveness in identifying exempt EAP employees.
The New Overtime Rule: Key Changes
The Department of Labor’s new overtime rule, developed after extensive public consultation and over 33,000 written comments, introduces significant changes to the salary thresholds that determine overtime eligibility. Here’s a breakdown of the key changes:
Increased Salary Thresholds
Starting July 1, 2024, most salaried workers earning less than $844 per week will become eligible for overtime pay. This threshold will increase again on January 1, 2025, to $1,128 per week. These adjustments mark a significant increase from the current threshold of $684 per week, expanding overtime eligibility to a larger pool of workers.
Regular Updates to Thresholds
To ensure the salary thresholds remain relevant and reflective of current wage trends, starting July 1, 2027, the thresholds will be updated every three years based on contemporary wage data. This approach provides employers with a predictable schedule for updates, allowing them to adapt more easily to changes.
Changes for Highly Compensated Employees
The rule also raises the annual compensation requirement for highly compensated employees, who are not entitled to overtime pay under the FLSA if certain conditions are met. Starting July 1, 2024, this requirement will increase from $107,432 to $132,964 per year and to $151,164 per year on January 1, 2025. These changes ensure that the compensation thresholds keep pace with overall wage growth, maintaining the integrity of the FLSA’s protections.
Impact on Workers
The new overtime rule is expected to have a significant impact on both workers and employers. For workers, especially those in lower-paid salaried positions, these changes mean greater financial security and fairer compensation for extra hours worked.
During the development of the new rule, the Department of Labor conducted nearly 30 listening sessions across the country, hearing from a diverse range of public voices. Workers shared their experiences and concerns, emphasizing the importance of being compensated for extra work or receiving raises to reflect their workload. For many, the new rule represents a long-overdue adjustment that recognizes their hard work and dedication.
Employers will need to carefully review and potentially adjust their compensation practices to align with the new thresholds. This may involve raising salaries for certain positions to maintain the EAP exemption or adjusting workloads to minimize overtime expenses. If your employer doesn’t increase your salary or begin tracking hours, you may have grounds to file a lawsuit for unpaid wages.
Preparing for the Changes
With the new rule already in effect as of July 1, 2024, it is crucial for workers like you to take action if you fall below the current or upcoming non-exempt threshold. Here are some steps to consider:
- Review Your Compensation: If you are a salaried worker earning close to or below the new thresholds, review your compensation and job duties. Determine if the new rule will make you eligible for overtime pay.
- Document Your Hours: Keep a detailed record of your working hours, especially if you often work more than 40 hours a week. This documentation can be crucial in ensuring you receive the correct overtime compensation.
- Discuss with Your Employer: If you believe you will be impacted by the new rule, have a conversation with your employer about how your compensation might change and what steps they plan to take to comply with the latest regulations.
Make Sure You’re Paid the Overtime You’re Owed
The Department of Labor’s new overtime rule represents a significant step forward in protecting American workers and ensuring they receive fair compensation for their time and effort. By increasing the salary thresholds for overtime eligibility and providing regular updates, the rule aims to restore the promise of the FLSA and extend its benefits to millions of lower-paid salaried workers.At The Law Offices of Todd M. Friedman, P.C., we are dedicated to advocating for workers’ rights and ensuring that every worker receives the pay they deserve. If you have questions about the new overtime rule or believe you may be entitled to additional pay, we encourage you to contact us for a consultation. Our experienced team is here to help you navigate these changes and secure the compensation you are owed.
