Department of Labor Raises Overtime Pay Threshold to $58,000 Annually

The Department of Labor’s Wage and Hour Division announced a new rule that raises the minimum salary needed to be exempt from overtime pay for certain workers. Previously, workers earning less than $35,568 annually were eligible for overtime pay if they worked more than 40 hours a week. Under the new rule , this threshold will increase to $58,656 per year.
To qualify for this overtime exemption, employees must earn at least $58,656, and their jobs must primarily involve executive, administrative, or professional duties. Employees earning less than this amount will be entitled to overtime wages for any hours worked beyond 40 hours a week.
The Department of Labor has outlined the following timeline for implementing the new rule:

Current Requirement: Employees must earn at least $35,568 annually, or $683 weekly, as set by the 2019 final rule. This calculation was based on the 20th percentile of weekly earnings in the Southern U.S. and the retail sector, using data from 2019.
Starting July 1, 2024: The threshold increases to $43,888 per year, or $844 weekly, using the same methodology but updated with wage data from 2024.
Starting January 1, 2025: The threshold will rise to $58,656 annually, or $1,128 weekly, corresponding to the 35th percentile of weekly earnings in the Southern U.S.
From July 1, 2027: The salary threshold will be recalculated every three years, with the Department of Labor providing at least 150 days’ notice before each update, based on the same earnings percentile.

A comment letter from Advocacy criticized the Department of Labor’s analysis of the new rule. It argued that the financial effects on small businesses were underestimated and could lead to significant challenges, including increased payroll costs. Advocacy suggested that the Department of Labor should perform a more thorough analysis of the costs for compliance and consider other options, such as a lower salary threshold.
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