May 9, 2024

Employment Alert: 

U.S. Department of Labor Increases Salary Basis for Exempt Employees

For employees to qualify as exempt from overtime, employees must meet both the duties test and the salary basis test under the white collar exemptions for the federal Fair Labor Standards Act (FLSA) and applicable state laws which can vary from FLSA.

 

On April 23, 2024, the U.S. Department of Labor announced a final rule which will increase the FLSA’s annual salary-level basis threshold for white-collar exemptions to overtime requirements. The DOL projects that millions of workers will benefit under these new rules.

 

The salary basis threshold will increase in two steps. Effective July 1, 2024, the annual salary threshold will increase from $35,568.00 to $43,888.00. Then, as of January 1, 2025, the salary threshold will increase to $58,656.00.

In addition, starting on July 1, 2027, the salary threshold will automatically increase every three years.

 

The rule also increases the Highly Compensated Employees' exemption salary basis from $107,432.00 to $132,964.00 on July 1, 2024, and then up to $151,164.00 effective January 1, 2025. Neither Oregon nor Washington recognize the Highly Compensated Employee exemption. Further, Washington has its own salary basis which is higher than the FLSA increased salary basis: $67,724.80 annual ($1,302.40 per week) which Washington employers must pay for exempt employees.

 

Takeaway

 

Employers will need to identify which qualifying employees have salaries that are between the current and the new thresholds for FLSA or Washington law. Employers will need to determine whether to consider these employees as no longer exempt due to the increased thresholds, and apply the required timekeeping and pay policies, or to increase the salary to protect the exempt status. This is also a prudent opportunity to review and ensure that the employees are performing duties which qualify for the FLSA white collar duties tests.


The employment lawyers at Farleigh Wada Witt are available to assist you with all of your questions and needs related to the increases in salary basis for exempt employees.

Kelly Tilden  focuses her practice in the areas of employment law, business, and litigation. She advises clients regarding the hiring, discipline and termination of employees, compliance with state and federal civil rights, wage and hour laws, and leave laws. Kelly offers practical guidance and experienced-based insight to help employers confidently apply state and federal regulations. She has been selected by her peers for inclusion in the Best Lawyers in America® 2018-2024 for Employment Law - Management.


Contact Kelly at 503.228.6044 or ktilden@fwwlaw.com

Kim McGair's practice emphasizes a wide range of litigation matters including employment, commercial litigation, commercial collections, personal injury defense, and real estate litigation. She is an advocate for her clients and provides them with sensible advice and strong representation to protect their interests and help them achieve their objectives as efficiently as possible. Kim was selected by her peers for inclusion in the Best Lawyers in America® 2018-2024 for Commercial Litigation and to the Oregon Super Lawyers list 2019-2023 for Commercial Litigation.


Contact Kim at 503.228.6044 or kmcgair@fwwlaw.com

Trish Walsh focuses her practice in the areas of litigation and employment law, protecting clients' interests inside and outside the courtroom. In her employment practice, Trish drafts, audits and updates policy handbooks and provides advice on employment issues under Oregon, Washington and federal laws. She has been selected by her peers for inclusion in the Best Lawyers in America® 2023-2024 for Commercial Litigation.


Contact Trish at 503.228.6044 or twalsh@fwwlaw.com

Megan Oshiro supports the firm's business, estate and succession planning, financial services and real estate practices. Megan's internship at Willamette's Business Law Clinic, Oregon DOJ in the Financial Fraud and Consumer Protection Section, and externship with the Adidas in-house counsel in Portland bring excellent skills and working knowledge to her practice. 

 

Contact Megan at 503.228.6044 or moshiro@fwwlaw.com

Jon Himes practices in several areas including litigation, employment, and financial services, enabling him to assist clients with a full-range of legal and business challenges. His employment practice focuses on employment litigation and wage and hour laws. 

 

Contact Jon at 503.228.6044 or jhimes@fwwlaw.com



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The contents of this publication are intended for general information only and should not be construed as legal advice or opinion on specific facts and circumstances.