As has been expected for some time now, the U.S. Department of Labor finally released the final rule increasing the minimum guaranteed salary an employee must receive to be considered “exempt” under the Fair Labor Standards Act (FLSA). The increase is set to take effect later this summer, and significantly increases the minimum salary required to be paid to employees to retain their exempt status. Employers who have exempt employees and who want to keep the exempt status is tact should evaluate their employees’ compensation to ensure compliance with the new rule. Below is a summary of the impending changes to the minimum salary requirement:

Currently, employees must receive a minimum guaranteed salary of $684 per week, or $35,568 per year. The final rule significantly increases the minimum salary between now and January 1, 2025. Effective July 1 of this year, to remain exempt under the FLSA, the employees’ guaranteed minimum salary increases to at least $844 per week, or the equivalent of $43,888 per year. As of January 1, 2025, the minimum salary increases again to $1,128 per week, or the equivalent of $58,656. Under the new rule, the minimum salary will automatically increase again on July 1, 2027, and will continue to increase every three years.

Keep in mind, that this new rule modifies the minimum guaranteed salary requirement, but employees still must satisfy the “duties” requirement of the FLSA to be considered an exempt employee.

If you have any questions about the impending rule change, exempt versus non-exempt employees, or other employment-related questions, contact Saalfeld Griggs PC!