Updates To FLSA’s Minimum Salary Rule

Minimum Salary Amounts

The Fair Labor Standards Act (FLSA) has been a cornerstone for protecting workers from exploitation for almost a century. It provides a minimum wage for all workers, overtime pay, child labor legislation, and establishes the foundation for recordkeeping for payroll and HR professionals.

The FLSA is frequently updated, ensuring that employees are protected against unfair labor practices. For example, the minimum wage has evolved from $0.25 to our current $7.25. A new update to the FLSA will be implemented on July 1, 2024, and will change how salaries and overtime is calculated for millions of workers.

Overtime Regulation

Most people assume that working overtime earns you more money. However, many salaried workers never receive that bonus pay. If you earn $35,568 or more for your annual salary and work overtime, your employer is not required to pay you additional overtime.

The regulations surrounding overtime pay are about to change and will be consistently updated going forward to ensure that more employees earn the time and a half-pay they deserve.

Starting on July 1st, 2024, the limit for overtime pay will grow to $43,888. This means that any person who makes $43,888 or less must be paid extra for their overtime work.

This limit will grow again on January 1st, 2025, to $58,656. Looking forward, starting on July 1st, 2027, and every three years after that, a new level will be calculated using up-to-date data to better protect employees.

How Will These Changes Affect Payroll Teams and CPAs?

By 2025, employees who earn $58,656 (roughly $30.50 an hour) will qualify for overtime pay, meaning that millions of employees not currently covered by FLSA’s overtime protection will become subject to this rule.

The first step is to identify which employees will become protected by the FLSA and ensure you can accurately track and record their time worked. From there, you should inform your executive team about the updates to overtime and discuss with them the impact time and a half pay for overtime will have on their annual budget for these newly protected employees.

Start Preparing Now

If you do not provide the correct overtime payment for your employees, the DOL can issue penalties that may result in criminal prosecution. The first conviction can lead to a fine of $10,000, and a second conviction may result in imprisonment. Rather than waiting for July and being behind the regulations, now is the time to start preparing for this shift.

Learn more about our payroll solutions and how we can help streamline your workflow, helping you do more with your time.