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Determine How the Proposed Overtime Exempt Salary Increase Would Impact Your Business

In September of 2023, the Department of Labor proposed an increase to minimum salary requirements for overtime exempt employees. If approved, these increases are likely to go into effect sometime in 2024.

This proposed rule change would raise the minimum exempt salary threshold from $684 per week (equivalent to $35,568 per year for a full-time employee) to $1,059 per week ($55,068 per year). Employers are permitted to use non-discretionary bonuses and incentive payments, including commissions, to satisfy up to 10% of the new salary threshold so long as said payments are made at least annually. The proposed rule would also raise the total compensation requirement for “highly compensated employees” from the current $107,432 per year threshold to $143,988 per year.

You may use the calculator tool below to evaluate the financial impact that this proposed overtime exemption rule change would have on your business. To use the tool, simply enter the current compensation information for a non-highly compensated employee. The tool will automatically apply the proposed 2024 salary threshold to the entered data and suggest the most cost-effective option for your business. To enter information for multiple employees at once, download the full worksheet by clicking the button at the bottom of the caluclator.

It should be noted that this calculator only assists with the financial aspect of qualifying for overtime exemption under the proposed rule. Meeting the salary threshold is just one requirement for classifying workers as exempt. Employees should remember that they must also meet the "duties" tests for one of the recognized exemptions in order to successfully qualify for exempt status. Each of the "white collar" (executive, administrative, and professional) exemptions has a different "duties" test.

Employers should also be aware that all employees are presumed to be classified as non-exempt until proven otherwise. The burden of proof is on employers to show that an employee qualifies as overtime exempt under applicable federal and state laws. Even though an employee may qualify for exempt status, an employer may decide to keep the employee as non-exempt for business reasons. Employers should review whether an employee qualifies as overtime exempt with legal counsel, including review of the duties and salary tests.

Are you looking for additional guidance on compensation planning for your organization? Check out this Effective Compensation Program Management Webinar from OneDigital's in-house compensation consulting team.

NOTICE: This calculator is for educational purposes only and is designed to provide basic mathematical estimates, based on the input you provide, for the purpose of reviewing the financial impact of the new FLSA overtime rule on your business or a given individual, and does not constitute legal or tax advice. Note that the final rule only affects the federal Fair Labor Standards Act (FLSA). Some states may have more restrictive rules on qualified overtime exemptions, including both the duties test and salary test which may be affected by higher state minimum wage laws. Employers should review which overtime exemption rules apply to them. Estimates assume salary is earned over a 12-month span.