Navigating the New Exemption Laws: Essential Tips for Small Businesses
On April 23, 2024, the U.S. Department of Labor (DOL) announced a significant final rule updating the salary thresholds for exempt employees under the Fair Labor Standards Act.
July 31, 2024
These changes affect executive, administrative, and professional employees. Here’s what you need to know to stay compliant and ensure your business is prepared. To determine if you or your employees qualify for this, please refer to the DOL website: https://www.dol.gov/agencies/whd/overtime/rulemaking.
Key Changes to Salary Levels
The current base exempt weekly salary rate of $684 will increase in two phases to eventually equal $1,128. This adjustment has substantial implications for how businesses classify and compensate their employees. See the chart below to track the phases of minimum salary increases:
|
Date |
Standard Salary Level |
|---|---|
|
Before July 1, 2024 |
$684 per week (equivalent to $35,568 per year) |
|
July 1, 2024 |
$844 per week (equivalent to $43,888 per year) |
|
January 1, 2025 |
$1,128 per week (equivalent to $58,656 per year) |
This new salary increase law also applies to highly compensated employees. To see the full salary increases for employees classified as so visit the DOL website at: https://www.dol.gov/agencies/whd/overtime/rulemaking.
Best Practices for Exempt Classification
To adapt to these changes, here are some essential steps you should follow:
-
Review Duties
- Ensure job descriptions accurately reflect the tasks and duties that meet the exemption standards.
-
Time and Effort Tracking
- Assess how much time tasks and duties actually require. Look for opportunities to improve efficiency and ensure your workforce is properly allocated.
-
Benchmarking
- Use compensation data to determine competitive factors. This will help you make informed decisions regarding employee classification.
How the SBDC Can Assist You?
To support you in implementing these changes, Deirdre Pattillo, SHRM-SCP certified senior project manager from the UTSA SBDC Center for Government Contracting can assist you in the following ways:
- Job Descriptions
- Review existing job descriptions or provide generic samples based on job titles and occupational codes for your customization.
- Compensation Reports
- Access to detailed compensation reports with data specific to major metropolitan statistical areas (MSAs) in Texas.
- Updates and Training
- Consider contacting your local DOL Wage and Hour representative for information sessions. For ongoing updates, bookmark the DOL’s Overtime Pay page here.
Stay Informed and Compliant
It’s important to stay informed about the nuances of these classification rules, as ongoing litigation might impact their final deployment. The DOL provides a wealth of resources, including data sheets and opinion letters, that explore these nuances in depth.
Contact Information
If you have any further questions or need personalized assistance, feel free to contact your ASU SBDC Advisor or business attorney.
Preparing for these changes can be challenging, but with the right information and support, your business can navigate these updates smoothly and effectively.
For more detailed information and resources, visit the Department of Labor’s Overtime Pay page.
This “Business Tips” article was written by Elisabeth Dantzler, Certified Business Advisor of Angelo State University’s Small Business Development Center. For more information on the topic of this article or the services of the ASU · SBDC, contact her at elisabeth.dantzler@angelo.edu.