The U.S. Department of Labor’s Wage and Hour Division recently announced a proposed notice of rule-making to update and revise the regulations that govern the exemption of certain white-collar employees from minimum wage and overtime pay. These rules can directly affect your optical practice.
A copy of that earlier information can be found here. This final rule, which went into effect on July 1, 2024, with updates scheduled every three years thereafter, introduces new federal salary thresholds that will have an impact on employers. Let's delve into the key takeaways from this final rule.
New Salary Requirements to Qualify as Exempt from Minimum Wage and Overtime
To qualify as an executive, administrative, or professional employee (“EAP”) under the Fair Label Standards Act (FLSA), and thus exempt from the overtime and minimum wage pay requirement, an employee must generally be compensated on a predetermined and fixed salary basis at a weekly rate not less than:
- Beginning July 1, 2024, $844 per week ($43,888 per year); increased from the current rate of $684 per week ($35,568 per year).
- Beginning January 1, 2025, $1,128 per week ($58,656 per year).
To be exempted from overtime and minimum wage as a highly compensated employee (“HCP”), the final rule increases the amount of annual compensation an employee earns to:
- Beginning July 1, 2024, $132,965 or more per year; increased from the current amount of $107,432 (at least $684 per week).
- Beginning July 1, 2025, $151,164 or more per year.
Some employees, such as doctors, lawyers, teachers, and outside sales staff, are not required to meet the salary tests. Additionally, qualifying as either an EAP or an HCP necessitates fulfilling other regulatory obligations outlining specific duties related to executive, administrative, and professional roles.
When Will These Changes Go into Effect?
This rule did go into effect on July 1, 2024. As of now, a few court cases have been filed in Texas, but the only impact to enforceability at this point is in regards to Texas State employees.
Nevertheless, two Republican lawmakers, Rep. Tim Walberg (MI) and Sen. Mike Braun (IN), have introduced a resolution under the Congressional Review Act (“CRA”) in an attempt to block the changes from being implemented. The CRA mandates that agencies notify Congress of rule issuances and allows Congress to utilize special procedures, including a joint resolution of disapproval, to overturn administrative rules. If this joint resolution is approved or disapproved by both the Senate and the House and is signed by the President, or if Congress overrides a Presidential veto, then the rule will no longer be in effect.