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DOL Releases Final Overtime Exemptions Rule

On April 23, 2024, the United States Wage and Hour Division of the Department of Labor (DOL) released a final rule titled “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees.” This rule becomes effective on July 1, 2024, and it updates and revises the provisions of the Fair Labor Standards Act (FLSA) that exempt certain employees from minimum wage and overtime requirements.

Key Provisions of the Final Rule

The final rule focuses on three main tests that determine whether an employee is exempt from FLSA minimum wage and overtime requirements:

Salary Basis Test: To be exempt, an employee must be paid a predetermined and fixed amount that is not subject to reduction based on variations in work quality or quantity.

Salary Level Test: The salary paid to the employee must meet a minimum specified amount. The final rule increases the salary level test amounts but does not modify the salary basis test or the duties test provisions.

Duties Test: The employee must perform executive, administrative, or professional duties.

Updated Salary Level Test Amounts

The following table outlines the current and future salary level test amounts for exempt employees:

Employers should review their compensation practices and ensure compliance with the updated salary thresholds to avoid potential violations of the FLSA. The final rule aims to protect workers’ rights and promote fair compensation for employees across various industries.

Navigating the complexities of employment regulations can take time and effort for businesses. That’s where PEOs and PEO brokers come in.

PEOs act as strategic partners, handling HR, payroll, benefits administration, and compliance. They pool resources across multiple clients, providing economies of scale and expertise.

PEO brokers, on the other hand, serve as guides, connecting businesses with the right PEO based on their unique needs. They assess company requirements, negotiate contracts, and ensure a seamless transition.

With over 600 PEO companies, how do you choose? As your dedicated PEO broker, we

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Ready to be compliant with the ever-changing employer burdens and have peace of mind that your business will pass a DOL audit? Contact today for personalized assistance or schedule a chat with us.

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Source: ADP

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