In our June newsletter we informed you of a major change to the Federal Fair Labor Standards Act (FLSA). Under this Federal rule change exempt employee salary thresholds were increased in July 2024. Additional increases were set to go into effect on January 1, 2025. A federal court judge in Texas has ruled that the Department of Labor (DOL) overreached in making these changes and has reverted the FLSA salary thresholds back to the 2019 levels. ($35,568 annually/$684 weekly) The court’s order applies nationally. The DOL may appeal this decision. However, given the new administration, it is unlikely the new thresholds will go into effect for the foreseeable future.
How does this affect you and your organization?
Nonprofit employees are subject to the FLSA. (Independent Contractors, Volunteers and qualifying Interns/Trainees are not.) Usually, hourly employees are subject to the FLSA meaning they are eligible for overtime pay for any work performed over 40 hours in one week. They are called “non-exempt” employees. Non-exempt employees have been unaffected by these rule changes.
Often, salaried employees working in a professional or administrative capacity are not subject to the FLSA. They are considered “exempt” employees and are not eligible for overtime pay for hours worked over 40 in one week. Salaried employees must make a minimum weekly wage in order to meet the salary test to qualify as an exempt employee. The salary threshold was the subject of the DOL rule change and the Federal court’s order.
For now, the FLSA exempt employee thresholds will revert to their pre-July 1, 2024, levels. This means that employees who are paid a least $684 a week ($35,568 annually) meet the salary test for exempt employee status. If the employee earns less than $684/week the employee is eligible for overtime pay for any work performed over 40 hours in one week.
Please be aware that the salary threshold is the first prong in a three-prong test to qualify as an exempt employee under the FLSA. Employees must satisfy all three prongs to qualify as exempt. Finally, employers should be aware that some states and local municipalities may have their own minimum salary thresholds for exempt status to apply.
We understand that these changes may be confusing. If you have questions about the FLSA and how these changes may affect your organization, please contact the Law Offices of Elizabeth Reinhardt and Associates. We are happy to answer any questions you may have concerning employer overtime requirements or any other employment law issue.
