Posted June 28, 2024

As an HR Consulting Firm specializing in supporting small businesses, we understand the importance of staying informed about the latest employment regulations. One of the most significant recent changes is the new overtime salary rule, which has the potential to impact your business operations and workforce management. In this article, we will provide you with a clear understanding of the new rule, its implications, and how to ensure your business remains compliant.

What is the New Overtime Salary Rule?

The new overtime salary rule, effective July 1, 2024, introduces changes to the Fair Labor Standards Act (FLSA) regulations. The rule primarily affects the salary threshold that determines whether white-collar workers are exempt from overtime pay under the executive, administrative, and professional exemptions.

Key Changes in the New Rule:

1. Salary Threshold Increase: The most notable change is the increase in the standard salary level that employees must earn to qualify as exempt from overtime pay. The new threshold is $43,888/yr. and increases to $58,656 on Jan. 1, 2025.

2. Automatic Updates: The rule also establishes a mechanism for automatically updating the salary threshold every few years, ensuring that the overtime exemptions keep pace with the wage growth over time.

3. Total Annual Compensation: For highly compensated employees, the threshold for the total annual compensation necessary to qualify for exemption has also been raised to $132,964.

Implications for Small Business:

Small businesses must carefully assess the impact of these changes on their workforce. Here are some steps you can take to prepare:

•  Review Employee Salaries: Identify which of your employees are currently classified as exempt and compare their salaries to the new threshold.
•  Evaluate Job Descriptions: Ensure that job duties align with the FLSA's duties tests for exemption, as meeting the salary threshold alone does not guarantee exempt status.
• Plan for Compliance: If you have employees who will be affected by the new rule, consider how you will handle the transition. Options include raising salaries to meet the new threshold, tracking hours for overtime pay, or restructuring work schedules.
• Communicate with Employees: Transparency is key. Inform your employees about the changes and how they will be impacted. This can help maintain trust and morale within your team.
• Seek Professional Advice: If you're unsure about how to proceed, consult with HR professionals or legal counsel to ensure your business remains compliant with the new regulations.

The new overtime salary rule represents a significant shift in how small businesses manage their workforce. By understanding the rule's requirements and taking proactive steps to comply, you can protect your business and ensure fair compensation for your employees. At Resourceology360, LLC we are committed to helping you navigate these changes.

For further information on the new overtime salary rule and other labor regulations, visit the U.S. Department of Labor's Wage and Hour Division at https://www.dol.gov/agencies/whd/flsa

Lettice Mayfield
Senior HR Consultant
Resourceology360, LLC