On April 26, 2024, the U.S. Department of Labor (DOL) published the much-anticipated final rule that will increase the minimum salary for many exempt employees. The increase will take effect in two steps. If you’d like to review the regulations yourself, they are available here—the relevant changes start on page 130 of the downloadable PDF.
Under the new rule, exempt executive, administrative, and professional employees (often referred to collectively as “EAP” employees) must be paid at least:
Teachers and practicing doctors and lawyers are exempt from these minimum salary requirements under federal law but may be subject to different state minimums. School-specific minimums apply to academic administrative employees.
Exempt computer employees can be paid on a salary or hourly basis. If salaried, they’re considered part of the EAP group and need to make the minimums listed above. Alternatively, they can be paid at least $27.63 per hour—this hourly rate was not changed by the rule.
Employees who are exempt under the HCE exemption must be paid at least the minimums listed above on a salary basis and receive total annual compensation of at least:
As usual, if a state law requires higher minimum salaries than what is required by the federal rule, the state minimums must be followed.
The rule implements automatic updates to the minimum salary levels every three years starting July 1, 2027. We don’t know what the future minimums will be, but employers will have at least 150 days' notice before those changes take effect.
The last time the DOL attempted a significant change to the salary minimums, the rule was challenged and ultimately blocked just weeks before taking effect. While we have no way of predicting if that will happen again, it’s very likely that this final rule will be litigated.
Employers have the following options:
We have created an FLSA Changes Decision-Making Guide and an FLSA Changes Implementation Guide to help employers determine their next steps. In those guides, we discuss cost-neutral rates of pay, employee morale, how to communicate classification changes, and more.