If you are feeling overwhelmed by the complexities of employment law, you’re not alone. With the Fair Labor Standards Act (FLSA) and its overtime exemptions constantly evolving, it can be difficult to keep up. However, it’s important to stay informed, especially with the updates expected in 2024. These changes will impact the salary threshold for exempt positions, so understanding the criteria for overtime eligibility is more important than ever. Here, we will look at the upcoming changes and clarify the criteria for overtime eligibility, empowering you to effectively assess your rights and anticipate the impact of these adjustments. 

What is the FLSA?

The FLSA is a cornerstone of federal labor law in the United States. It was established to protect workers by setting standards for minimum wage, overtime pay, and child labor regulations. Enacted in 1938, the FLSA ensures that employees receive fair compensation for their labor, particularly through overtime wages for hours worked beyond the standard 40-hour workweek. By defining the legal framework for employment practices, the FLSA plays a central role in safeguarding the rights and well-being of workers across various industries nationwide.

Understanding Overtime Exemptions

Overtime exemptions under the FLSA delineate specific categories of employees who are not entitled to overtime pay, despite working over the standard 40-hour workweek. These exemptions are based on the nature of the work and level of responsibility. The criteria for these exemptions include job duties, salary levels, and, in some cases, the employee’s decision-making authority. Understanding these exemptions is crucial for employees to ensure they are correctly classified and compensated for their work. Misclassification can lead to lost overtime wages, making it essential for workers to be aware of their rights and the qualifications for exempt status.

Criteria for Exemptions

The criteria for FLSA overtime exemptions set clear boundaries for which employees qualify as exempt from overtime pay:

  • Executive Exemption: Requires management as the primary duty, including the supervision of two or more full-time employees and the authority to hire or fire.
  • Administrative Exemption: Involves office or non-manual work directly related to business operations or management, requiring the exercise of discretion and independent judgment.
  • Professional Exemption: Applies to jobs that require advanced knowledge in a field of science or learning, typically acquired through prolonged specialized intellectual instruction.
  • Computer Exemption: Targets employees engaged in computer systems analysis, programming, and other similarly skilled roles in the computer field.
  • Outside Sales Exemption: For employees making sales or obtaining orders away from the employer’s place of business.

Each category has specific tests for job duties and salary levels that must be met for an employee to be classified as exempt, emphasizing the importance of both the nature of the work and compensation in determining exemption status.

Proposed Changes to the FLSA Exemptions

The FLSA exemptions are poised for significant change, with proposed adjustments aiming to update the salary thresholds for certain exempt categories. Under the proposed rule by the U.S. Department of Labor (DOL), on July 1, 2024, the standard salary for executive, administrative, and professional employees to qualify as exempt would increase from $684 per week ($35,568 annually) to $844 per week ($43,888 annually), and the total annual compensation level for highly compensated employees (HCEs) will equal $132,964. On January 1, 2025, the standard salary level will equal $1,128 per week ($58,656 annually) and the HCE total annual compensation level will increase to $151,164. The proposed increases are expected to be implemented on July 1, 2024, but could potentially be delayed by lawsuits filed by business interests. 

It should be noted that a day-rate is not considered a salary and that some states already have compensation levels for exemption that are higher than those set under the FLSA. For these states, the proposed changes will have no impact. However, there are many other states where the proposed new rule will result in some employees being reclassified as non-exempt and thus eligible for overtime compensation. This adjustment is critical to ensure that the exemption criteria accurately reflect the current economic landscape, thereby extending overtime protections to more workers.

How to Determine if You’re Exempt

Determining if you’re exempt from FLSA overtime pay requires carefully examining your job duties and salary. First, review the specific criteria for exemptions, which include your role’s responsibilities, the nature of your work, and your decision-making authority. Next, compare your salary against the set thresholds for exempt status. You may be classified as exempt if your job aligns with the executive, administrative, professional, computer, or outside sales categories and meets the salary requirements, if applicable. However, job titles alone don’t determine exemption status; the actual duties performed are what matters. If you are unsure, seeking clarification from HR or legal advice is advisable.

Contact the Lore Law Firm with Questions About Overtime Exemptions

The Lore Law Firm is dedicated to assisting employees in understanding their rights under the FLSA, including navigating the complex area of overtime exemptions. Our team can help evaluate your employment situation and determine if you’ve been properly classified. If you believe your exemption status may be incorrect, complete our free and confidential online client intake form today.