The U.S. Department of Labor (DOL) Increases the Salary Threshold for Exempt Workers
The DOL has updated regulations related to exemptions from minimum wage obligations under the Fair Labor Standards Act (FLSA) for workers who fit within the executive, administrative, professional, outside sales, or computer professional exemptions, as well as highly compensated employees.
Effective July 1, 2024, workers must earn at least $844 weekly ($43,888 annually), increased from $684 weekly ($35,568 annually), to be classified as exempt under one of the white collar exemptions. The earnings threshold for highly compensated employees* will increase as well from $107,432 per year to $132,964 per year. Employees must still meet any other applicable criteria for exemption, including performing specific duties.
After the initial increase in July, the salary threshold will again increase on January 1, 2025, to $1,128 per week ($58,656 annually) for white-collar workers and $151,164 annually for highly compensated employees. After that, the new regulations provide for regular increases every three years beginning on January 1, 2027. Notice of future increases will be published at least 150 days prior to each increase.
While many states, including Washington, have established their own salary threshold which exceeds the federal levels for white-collar exemptions, states such as Montana and Idaho without higher state requirements, will need to meet the new threshold established by the FLSA. Employers in states such as Montana and Idaho with exempt workers should consider the changes when budgeting for 2024 and beyond.
*Washington does not recognize the highly compensated employee exemption.