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Fair Labor Standards Act Rule Takes Effect July 1: Salary Threshold for Overtime Exemption to Change

By Hollie Reedy posted 22 days ago

  

The Fair Labor Standards Act (FLSA) requires employers to pay employees overtime for hours over forty in a week unless there is an exception to the rule. An exemption applicable to non-teaching administrative employees is called the EAP exception (executive, administrative, and professional). The employee’s salary and duties are compared to the U.S. Department of Labor standard (DOL) (using the “salary and duties” tests) to determine whether they are exempt executive, administrative, or professional positions and therefore not eligible for overtime under the law. The basic framework requires an employee to be paid a salary in an amount at least equal to the amount in the rule and that the employee has either executive, administrative, or professional status within the organization. If the exemption is met, the employee is not entitled to overtime pay. 

In April 2024, DOL announced a Final Rule increasing the threshold level salary minimum for the “salary test”. (See Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees).

The new rule takes effect on July 1, 2024. On that date, the new salary amount threshold for a nonteaching, salaried supervisor or administrator increases to $844 week/$43,888 annual salary (up from $684 week/$35,568/annual salary.) Then, in January 2025, the method used to calculate the salary will change and the amounts will again increase to $1,128week/ $58,656 annual salary. Updates to the threshold salary amounts for the exemption now will occur every three years going forward. 

The second part of the test to determine whether a nonteaching administrator/supervisor is exempt from overtime requirements is known as “the duties test”. Administrative employees meet the duties test if they primarily perform office or non-manual work directly related to the operations of the school district. Their duties must involve the exercise of discretion and independent judgment on matters of significance. 

Executive employees are another class eligible for the exemption. To meet that slightly different exemption, their primary duty must be managing a particular department or division of school operations. They must regularly direct the work of at least two full-time or equivalent employees, and must have the authority to hire and fire, or have their recommendations for promotion, termination, hiring or other actions given particular weight. 

More information can be found in Frequently Asked Questions - Final Rule: Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees.

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