USDOL Increases Base Salary Required for “White Collar” Exemptions

By May 13, 2024 Labor and Employment

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On April 23, 2024, the U.S. Department Of Labor (USDOL) announced a final rule which is scheduled to increase the annual salary threshold for the executive, administrative, and professional (the “white-collar” or “EAP”) exemptions from $35,568 ($684 a week) to $43,888 ($844 a week), effective July 1, 2024, and to $58,656 ($1,128 a week), effective January 1, 2025.

For the highly compensated employee (HCE) exemption, the minimum total annual compensation level is scheduled to increase from $107,432 ($2,066 a week) to $132,964 ($2,557 a week), effective July 1, 2024, and to $151,164 ($2,907 a week), effective January 1, 2025.

Beginning July 1, 2027, the salary threshold and minimum annual compensation are scheduled to update every three years, and will be based on current wage data.

Background:

Under the Fair Labor Standards Act (FLSA), employees are entitled to overtime compensation at a rate of 1.5 times their regular rate of pay for all hours worked in excess of 40 in a workweek, unless the employee is “exempt.”

The FLSA’s white-collar/EAP exemptions exclude certain executive, administrative, and professional employees from federal minimum wage and overtime requirements. To qualify for an EAP exemption, an employee must:

  • Primarily perform executive, administrative, or professional duties as provided in the USDOL regulations (the duties test);
  • Be paid on a salary basis, meaning payment of a predetermined, fixed salary that is not subject to reduction because of variations in quantity or quality of work performed (the salary-basis test); and
  • Be paid more than a specified minimum salary threshold (the salary-level test).

The HCE exemption is available for office or non-manual work where the employee regularly performs one or more exempt duties even if they do not satisfy all exempt duty requirements.

The New Rule:

The focus of the new rule is the salary level requirement.

In September 2003, the USDOL published a proposed rule that would significantly increase the minimum salary required to qualify for the “white collar” / EAP exemptions under the FLSA. After receiving comments on the proposed rule, the USDOL issued its final rule on April 23, 2024.

  • For the EAP exemptions, the current minimum salary level, which was set in 2019, is $684 per week or $35,568 annually, and is based on the 20th percentile of full-time salaried workers in the lowest wage census region. The new minimum salary level needed to qualify for the EAP exemptions will be $43,888 ($844 a week), effective July 1, 2024, and will increase to $58,656 ($1,128 a week), effective January 1, 2025.
  • The new minimum salary level for the HCE exemption will increase from $107,432 ($2,066 a week) to $132,964 ($2,557 a week), effective July 1, 2024, and will jump to $151,164 ($2,907 a week), effective January 1, 2025.  (
  • The new rule also provides for automatic adjustments to salary thresholds every three years, starting on July 1, 2027, by applying up-to-date wage data to determine new salary levels.

Maine’s Minimum Salary Threshold for White-Collar Exemptions

Under Maine law, the minimum salary level is “3000 times the State’s minimum hourly wage or the annualized rate established by the United States Department of Labor under the federal Fair Labor Standards Act, whichever is higher.”

Maine’s current (2024) minimum salary requirement is $816.35 per week or $42,450.20 annually. (Maine’s minimum salary requirement increases as Maine’s minimum wage increases).

Because the new federal minimum salary levels required for a white-collar exemption will be higher than the levels established under Maine law, Maine employers will be required to adjust salaries of employees otherwise eligible for an EAP exemption upward to at least the new federal minimum salary levels of $43,888 ($844 a week) starting July 1, 2024 and to $58,656 ($1,128 a week) starting January 1, 2025.

Action Items 

Employers should review their pay practices for compliance:

  • Review all positions classified as exempt and be sure that they meet all required criteria: duties test, salary basis test, and salary level test.
  • For those employees earning a salary less than $58,656 per year, consider whether you will raise their salary to meet the new threshold or convert them to non-exempt, hourly status.
  • Also, review your computer access and mobile device policies and ensure that non-exempt employees are not performing work outside of regular business hours, as these hours must be compensated for non-exempt personnel.

If you have questions about the new minimum salary thresholds for the white-collar exemptions, please contact an attorney in our Employment Law practice group.