Understanding the New Salary Exemption Rule Effective July 1, 2024

At EverythingHR, we strive to keep you informed about significant regulatory changes that impact your business operations and human resource practices. One such development is the implementation of the new salary exemption rule, set to take effect on July 1, 2024. This update is crucial for employers to understand as it affects the classification of employees and payroll management.

Key Dates and Salary Thresholds

The Department of Labor has announced changes to the salary exemption rule that will first be implemented on July 1, 2024. Starting from this date, the minimum salary threshold for exempt employees will be adjusted. This adjustment means that to classify an employee as exempt from overtime under the Fair Labor Standards Act (FLSA), employers must meet the new salary criteria.

  • As of July 1, 2024: The new minimum salary for exempt employees will be set at $43, 888.00.
  • On January 1, 2025: A further revision will occur, adjusting the salary threshold to $58,656.00

It is essential for businesses to prepare for these changes in advance to ensure compliance and to adjust payroll systems accordingly.

Who Qualifies as a Salaried Employee?

The FLSA provides guidelines that help determine which employees can be classified as exempt salaried employees. To qualify as an exempt salaried employee, individuals must meet certain criteria beyond just earning a salary above the new minimum threshold. These criteria generally include:

  • Salary Basis: The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed.
  • Duties Test: The employee’s job duties must primarily involve executive, administrative, or professional tasks as defined by the FLSA.
  • Salary Level: The employee’s salary must meet or exceed the set salary threshold.

Implications for Employers

The update to the salary exemption rule means that many employees who were previously classified as exempt may now fall under the non-exempt category if their salaries do not meet the new thresholds. Employers will need to consider whether to increase salaries to maintain exemptions or reclassify employees as non-exempt, which would make them eligible for overtime pay.

Steps to Prepare

  1. Review Employee Classifications: Audit your current workforce to identify which employees might be affected by the new salary thresholds.
  2. Consider Salary Adjustments: Decide if it will be more cost-effective to raise salaries to meet the new thresholds or to reclassify employees as non-exempt.
  3. Update Payroll Systems: Ensure your payroll systems are updated to accommodate the new salary thresholds and to handle overtime calculations if necessary.
  4. Communicate Changes: Keep your employees informed about how these changes might affect their classification and compensation.


The new salary exemption rule is a significant change that will require careful planning and adjustment by employers. By understanding the details and preparing ahead of the July 1, 2024, effective date, businesses can ensure compliance and minimize disruptions to their operations.

We are here to assist with navigating these changes smoothly and efficiently.

Here’s a link for more information.      

Biden-Harris administration finalizes rule to increase compensation thresholds for overtime eligibility, expanding protections for millions of workers | U.S. Department of Labor (dol.gov)


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Felicia G. Harris
​Principal Owner

This Podcast will provide you with the latest human resources trends whether you only do business in your home state or across the United States. You will be able to call in and talk with human resources professionals about the issues that keep you up at night, and more importantly, hear best practices from other business owners that have been in your shoes