Long Overdue Increases to the Minimum Salary Threshold

14 June 2024
Jeffrey Geisinger
Long Overdue Increases to the Minimum Salary Threshold

Effective July 1, 2024, the U.S. Department of Labor (“DOL”) is increasing the minimum salary threshold for salaried employees from $684 per week ($35,568 annually) to $844 per week ($43,888 annually).

The minimum salary threshold is the minimum amount that an employer must pay to a salaried employee. Ordinarily, under the Fair Labor Standards Act (“FLSA”), employees are entitled to overtime compensation when they work more than 40 hours in a week. However, there is an exemption for certain salaried employees. An employee who falls within the salary exemption is not entitled to overtime compensation, even if he or she works more than 40 hours in a week.

In 1975, the minimum salary threshold was $8,060 per year. This equates to around $48,500 in today’s money. Previously, the DOL used to increase the minimum salary threshold on a fairly regular basis to account for inflation. However, in recent years, the increases have been smaller and less frequent. As a result, the threshold amount has failed to keep pace with inflation, and employers have been able to use the salary exemption as a way to make underpaid employees work long hours, while denying them overtime compensation.

Currently, the minimum salary threshold is $684 per week or $35,568 per year. This is about $13,000 less per year than the inflation adjusted threshold from 1975. Effective July 1, 2024, the threshold will be increased to $844 per week or $43,888 per year. Six months later, on January 1, 2025, the minimum salary threshold will be increased again to $1,128 per week or $58,656 per year.

Beginning July 1, 2027, the minimum salary threshold will be increased every three years. The regularly scheduled increases will help to ensure that the threshold keeps pace with inflation, so that employees are not unfairly denied overtime compensation. Employers will also benefit from the regularly scheduled increases because employers will now know when to expect the increases, which will allow employers to better plan and adjust for the increases as they take effect.



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