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Fair Wage Alert: How Your Minimum Salary is Changing

by | Apr 30, 2024 | Employment Law, Federal Law Update, Wage: Minimum Wage, Wage: Overtime |

The Fair Labor Standards Act (“FLSA”) and the Ohio Minimum Fair Wage Standards Act (“OMFWSA”) require that all covered employers pay at least the applicable minimum wage and an overtime premium of one- and one-half times the regular rate when employees work more than forty hours per week. However, these laws also contain certain exemptions from this basic requirement. As our wage and hour attorneys have previously blogged, most of these exemptions contain two basic requirements: (1) that the employee perform certain job duties contained within the exemption, and (2) that the employee be paid on a “salary basis.”

Just like there is a minimum hourly wage, there is also a “minimum salary” that people working in exempt positions must be paid if the exemption from overtime is to apply. To be clear, employers can pay employees a salary that is below the “minimum” (as long as it is equivalent to at least the minimum wage), but if they do this, they must also still pay overtime if the employees work more than forty hours a week. Only otherwise exempt employees who are paid the “minimum” salary or above are not entitled to overtime.

Recently, the Department of Labor (“DOL”) announced some significant changes to the salary that not only increase the minimum salary, but that also ensures that this minimum will continue to increase over time.

What Are “Exempt” Positions?

As our wage and hour attorneys have previously blogged, there are numerous exemptions based on job duties, such as the executive exemption (primary duty must be managing the enterprise or a department, managing employees, and must have the ability to hire and fire or have significant input into those decisions; the administrative exemption (primary duty must be the performance of office or non-manual work directly related to the management or general business operations, can exercise discretion and independent judgment as to matters of significance); and the professional exemption (primary duty must be the performance of work requiring advanced knowledge which is predominantly intellectual in character, requiring the exercise of discretion and judgment, that typically requires a degree in that field and licensing. There are several other exemptions that are beyond the scope of this blog, but the thing to know is that with the exception of the sales exemptions and computer employee exemption, all exempt employees must be paid at least the minimum salary to be exempt from overtime.

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What’s Changing:

Starting July 1, 2024, the amount of money you need to make to be exempt from overtime is going up. Right now, it’s $684 per week (or $35,568.00 per year), but on July 1, it’s going to increase to $844 per week, or $43,888 per year. Then, on January 1, 2025, it’s going up even more to $1,128 per week ($58, 656 per year). Likewise, the “highly compensated” exemption amount is increasing from its current amount, $107,432.00 per year, to $132,964.00 (July 1) and then $151,164 (January 1).

Another important change is that going forward, the minimum salary will be indexed and automatically increased every three years based on salary date across the United States, without the need for the DOL to make new rules. While this is not quite as good as tying the rate to inflation (like the Ohio minimum wage), it is still a win for employees.

What Does This Mean To Me?

While it is possible that business owners and their lobbyist will sue to block the new rule from going into effect, if the new rule is not blocked by a court, any salaried employee making less than the new minimum will either need to have their salary increased or alternatively, employees making less than the new minimum will need to be paid overtime when they work more than forty hours a week. Employees who earn more than the new minimum will not be impacted – at least for now. Future automatic increases will obviously impact more salaried employees.

It’s essential to understand your rights under the FLSA and how these changes may affect you. If you have questions or concerns about your eligibility for overtime pay or any other workplace issue, our team at Spitz Law Firm is here to help. We specialize in employee rights and can provide guidance tailored to your specific situation.

Staying Informed:

The DOL’s changes to minimum salary requirements represent a significant shift in wage protections for American workers. Whether these changes result in increased pay or altered compensation structures, understanding your rights and seeking guidance when needed is essential. At Spitz, The Employee’s Attorney, we’re dedicated to advocating for employees and ensuring they receive the pay they are legally entitled to.

Disclaimer:

Because the only way to determine if you may have a wage theft claim against your employer is to have a wage and hour lawyer review the facts of your situation, your best option is to call the right attorney to schedule a free and confidential consultation. (Read: What is the Spitz No Fee Guarantee?). Call our top employment lawyers in Ohio, Michigan, North Carolina, and Kentucky to get help now. Spitz, The Employee’s Law Firm and its experienced attorneys are dedicated to protecting employees’ rights and solving employment disputes.