The U.S. Department of Labor (DOL) has finalized a significant rule change affecting overtime eligibility, raising the salary threshold for certain exempt workers, including executives, professionals, and administrative personnel. This update, released on April 23, 2024, mandates that employers either increase salaries or reclassify affected employees as eligible for overtime. However, the rule's reliance on a methodology previously invalidated in 2016 opens the door for potential litigation and could result in the rule being blocked.

Under the Fair Labor Standards Act (FLSA), certain employees are exempt from overtime pay if they meet specific criteria, including earning a minimum salary threshold. This threshold has been raised by the new rule, with adjustments set to take effect in stages. Beginning July 1, 2024, the minimum salary will increase to $43,888, followed by a further raise to $58,656 in January 2025. The rule also includes provisions for automatic updates every three years.

Additionally, the rule raises the minimum salary for highly compensated employees, with adjustments phased in over the same timeline. These changes affect the classification of employees under federal law, but their impact may vary in states with differing wage-and-hour laws and exemptions.

Before the rule can take effect on July 1, 2024, it faces potential legal challenges, as past updates have been contested in court. Employers are advised to review their salary structures and classification policies to ensure compliance, although decisive action may be deferred pending further developments.

This topic will be discussed at HCAF's upcoming Home Care Connection event series, which will take place in person across the state, as well as online, in May 2024. Click here to find an event near you and register today!

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