Salary Compliance Alert for Business Owners

We don’t usually share a lot on our blog relating to Federal legal changes, but this one is a big one that we felt needed to be shared with our clients, partners and friends. There are significant changes coming soon regarding the salary threshold for exempt or salaried level employees. The major change will really hit in January 2025, that will be a 33% increase in the salary threshold.

The 2024 OT Rule raises the minimum salary threshold for the executive, administrative, and professional exemptions – known as EAP and/or white-collar exemptions – from $684/week ($35,568 annually) to $844/week ($43,888 annually) starting on July 1, 2024, and to $1,128/week ($58,656 annually) starting on January 1, 2025.

So, what to do now. The first increase will occur in less than 2 weeks on July 1st. Make sure your lowest paid salaried employees are making more than $43,888. If not, it would be recommended that you do a market adjustment to move them there or think about moving them to non-exempt or hourly employees. Of course, if you convert them to hourly, they are then eligible for overtime rules in your State. Prepare for the next big change in the salary threshold to $58, 656 in January, 2025. Make sure that you plan for this change when budgeting for 2025. Does it make sense to move lower paid salaried employees to the threshold minimum or convert them to hourly or non-exempt employees. We can’t tell you what the right answer is there, it depends on specific factors within your business. As you already know, business is about planning, reviewing data, and making informed decisions regarding the current state of your business. As always, we are here to help if you have any questions regarding this upcoming change.

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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.