As a reminder, the Department of Labor issued a new overtime rule increasing the salary threshold under the Fair Labor Standards Act (FLSA) for overtime eligibility extending overtime protections to salaried employees earning less than $1,128 per week ($58,656 per year) starting January 1, 2025. This is an increase from the previous threshold of $844 per week ($43,888 per year).
Future salary/threshold updates are set to occur on or about July 1, 2027, and every 3 years thereafter.
Correct FLSA classification ensures compliance with federal and state labor laws and maintains a fair and ethical workplace. Incorrectly classifying employees as exempt (ineligible from earning overtime) when employees are non-exempt (eligible for overtime) can lead to violations of the FLSA. Misclassification can result in lawsuits from employees seeking unpaid overtime, penalties from government agencies, and damage an employer’s reputation if it is discovered.
Per a DOL Fact Sheet on the Fair Labor Standards Act (FLSA) on non-exempt employees, “an employer who requires or permits an employee to work overtime is generally required to pay the employee premium pay for such overtime work. Unless specifically exempted, employees covered by the Act must receive overtime pay for hours worked more than 40 in a workweek at a rate not less than time and one-half their regular rates of pay. The Act does not require overtime pay for work on Saturdays, Sundays, holidays, or regular days of rest, as such.”
The Office of Personnel Management provides an example of How to Compute FLSA Overtime Pay. The DOL defines an employee’s workweek as, “a fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods. It need not coincide with the calendar week, but may begin on any day and at any hour of the day. Normally, overtime pay earned in a particular workweek must be paid on the regular pay day for the pay period in which the wages were earned.”
Employees are exempt from the FLSA minimum wage and overtime protections if they are employed in a bona fide executive, administrative, or professional capacity determined by meeting three tests:
- be paid a predetermined and fixed amount (salary) that is not subject to reduction because of variations in the quality or quantity of work performed;
- be paid at least $1,128 per week ; and
- primarily perform executive, administrative, or professional duties, as provided in the Department’s regulations.
The DOL Wage and Hour Division enforces the FLSA via investigators stationed across the U.S. who conduct investigations into employment conditions & practices. It is a violation of the FLSA to fire, or in any other manner, discriminate against an employee for filing a complaint or for participating in a FLSA legal proceeding. FLSA complaints can originate from affected employee who believes their FLSA rights have been violated, third parties (other employees, supervisors), or former employees. The identity of the person who files a complaint is kept confidential unless required by court order or to properly investigate the complaint.