New Overtime Rule
Thresholds Raised
The Department of Labor (DOL) issued its final rule altering the overtime regulations under the Fair Labor Standards Act (FLSA).
The new DOL rule raises the minimum salary threshold for employees exempt from overtime pay. Under current law, an employee who is exempt from overtime must be paid on a salary basis at least $35,568 annually, and also meet the duties requirement under the FLSA. Under the DOL’s rule released this week, beginning on July 1, 2024, the minimum annual salary for exempt employees will increase to $43,888, and then increase again to $58,656 on January 1, 2025. This is ultimately a more than 60% increase from the current level.
Additionally, the minimum salary threshold for highly compensated employees (HCE) will be raised to $132,964 on July 1, 2024, and then to $151,164 on January 1, 2025. This is ultimately a more than 40% increase from the current threshold of $107,432.
Increases in Labor Costs
The rule also implements automatic updates to both the minimum salary threshold and the HCE threshold, which will be increased every 3 years.
As both THLA and the American Hotel & Lodging Association (AHLA) explained in its comments on DOL’s proposed rule, large increases to the minimum salary threshold and HCE threshold will result in increases in labor costs that the hotel industry cannot absorb. Hoteliers will be forced to find ways to offset those increases, which will result in workers being reclassified from salaried to hourly. The rule also demands compliance within 60 days, an unnecessarily short timeline that will only add additional burdens to the industry.
Keeping You Updated
THLA, along with our national colleagues at AHLA, are exploring options to push back on these rule changes. The options to do so may include legal challenges to the final overtime rule. However, hoteliers should begin planning now for the new overtime salary requirements to go into effect starting on July 1st.
We will keep THLA members updated on the overtime rule’s salary requirements. Do not hesitate to contact us if you have any questions.
THLA attorneys are always available to answer your questions. You may call our office at 512-474-2996, or email us at .