That depends on whether you’re an employer or an employee. As an employee, you’re probably entitled to overtime pay if you earn below the threshold defined in the law. That threshold was raised in July of 2024 to more than $43,000 and is scheduled to change again next year to more than $58,000. If you’re an employer, it means you probably need to start tracking accurate employee work time so you can pay overtime to employees who earn less than those amounts per year. These changes aim to expand protections for millions of lower-paid salaried workers who have been largely left behind without mandatory increases that, at the very least, mirror annual cost of living increases caused by inflation and other factors.
Key Changes
- Standard Salary Level: Increased from $684 per week ($35,568 annually) to $844 per week ($43,888 annually) on July 1, 2024, and will increase further to $1,128 per week ($58,656 annually) on January 1, 2025.
- Highly Compensated Employees (HCEs): Total annual compensation requirement rises from $107,432 to $132,964 on July 1, 2024, and then to $151,164 on January 1, 2025.
- Special Salary Levels: Remain unchanged for employees in Puerto Rico, Guam, the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands ($455 per week, equivalent to $23,660 annually), and American Samoa ($380 per week, equivalent to $19,760 annually).
- Computer Employees: Hourly compensation remains at $27.63.
- Motion Picture Industry: Special base rate remains at $1,043 per week (or a proportionate amount based on days worked).
Impact and Implications
The changes aim to restore overtime protections for lower-paid salaried workers, ensuring fair pay for long hours worked. Employers must adjust compensation structures or convert affected employees to hourly pay. The updates also establish a mechanism for regular threshold adjustments every three years, starting July 1, 2027. This last change is key for typical hourly workers who, in the past, have gone up to 16 years without a cost of living increase. Here’s a history of the salaried requirement over the last 6o years.
- 1963: $75/week ($3,900/year)
- 1970: $100/week ($5,200/year)
- 1975: $155/week ($8,060/year)
- 1980: $250/week ($13,000/year)
- 1992: $250/week ($13,000/year) (no change)
- 2004: $455/week ($23,660/year)
- 2016: $913/week ($47,476/year) (update blocked by court)
- 2020: $684/week ($35,568/year)
- 2024: $844/week ($43,888/year) (interim update)
- 2025: $1,128/week ($58,656/year) (planned update)
Effective Dates
- July 1, 2024: Initial salary threshold increase
- January 1, 2025: Second salary threshold increase
- July 1, 2027: Regular updates to salary thresholds begin
As an employer, what actions should I take now?
The update in 2025 is significant, representing a nearly 34% increase from 2024. Many workers who were formerly exempt will suddenly be eligible for overtime. It’s important to get ready for that change now because unpaid wages are no joke when it comes to dealing with lawsuits and labor boards. Also, getting a head start on upcoming compliance requirements is never a bad idea.
The single most important thing you can do to prepare is to get your employees comfortable with tracking their time. Timesheets.com can help. We’ve been focused on making a better employee time tracking mouse trap for over 2 decades. Get ahold of us today and let’s talk about how your business is going to navigate the new FLSA rules.
