Big Change on Pay Requirements

There were sweeping changes put into law earlier this year regarding pay requirements for exempt employees and additional changes will be put in place on January 1, 2025. We did a blog on this several months ago regarding the July 1 changes. These changes applied to all exempt employees who are not eligible to receive overtime pay and are often called salaried employees. On July 1, 2024, the new Department of Labor, Fair Labor Standards Act (FLSA) threshold for overtime pay was raised to $844 per week or ($43,888 annually) and on January 1, 2025, this will increase to $1,128 per week or ($58,656 annually). This is over a 30% increase from the increase made in July.

The January 1, 2025 increase is significant and may impact your business or your clients’ businesses so listen up.

Here are 3 things you need to do:

1) Review if you have any exempt employees who are under the new threshold currently. If so, decide if they are truly an exempt level employee or if they should be converted to hourly.

2) If you do need to increase their salary to $58,656 as of January 1, 2025, this is NOT an increase based on performance. This is a market adjustment based on the new mandate by the Department of Labor.

3) You should still consider them for a salary increase based on performance to be fair to the employee. Most companies will do this in early 2025.

Download my free eBook which includes a list of helpful sample questions for your 1:1 employee meetings and other performance management information

Download eBook

Download my free eBook which includes a list of helpful sample questions for your 1:1 employee meetings and other performance management information

Download eBook

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Small and medium-sized businesses may not have the time or expertise to implement the necessary people strategies for business success. The ideas above can be easily implemented by you to help improve the performance of your employees which leads to increased employee engagement and increasing the bottom line.

We are here to help you with the people side of your business: employee engagement, retention programs, performance management, vision, and strategic plans, leadership development, selection & onboarding, compensations programs, organizational design, employee handbooks, core values, and all things HR-related.