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A Business Owner’s Guide to the DOL’s New Overtime Rule

How to stay compliant with the DOL's new overtime rule as a business owner

This year, the U.S. Department of Labor (DOL) unveiled a new final rule that will significantly raise the minimum salaries that are eligible for white collar exemptions under the Fair Labor Standards Act (FLSA). 

For more information on exactly what this overtime rule entails, check out our blog post here. This rule will affect both which employees are entitled to overtime pay as well as employer compensation structures. For now, the most important thing to know is that the new overtime rule’s first increase is going into effect July 1, 2024. This will:

  • Raise the minimum weekly salary requirement from $684 to $844 per week ($43,888 annually) in order for an employee to qualify for one of the FLSA’s three white collar overtime exemptions.

  • Raise the salary threshold for the highly compensated employees (HCE) exemption from $107,432 to $132,964.

So, what does this mean for your business – what are the effects of this new ruling and what should you do as an employer to prepare? Keep reading to find out.

What Does the New Overtime Rule Mean for Your Business?

The DOL estimates that in its first year, the overtime rule will impose approximately $1.4 billion of direct costs on employers, broken down into the following categories:

  • $451.6 million in regulatory familiarization costs

  • $299.1 million in adjustment costs

  • $685.5 million in managerial costs 

The DOL also estimates that an income transfer of $1.5 billion from employers to employees will occur in the overtime rule’s first year in the form of new overtime premiums and pay raises to maintain an exempt status for some employees affected by the new ruling.

However, the overtime rule will also benefit employers by reducing misclassification risks, increasing employee productivity, and reducing employee turnover, partly due to better compensation. It will also protect and increase personal time for employees.

What Should Your Business Do to Prepare for the New Overtime Rule?

Preparing your business for compliance with the new overtime rule may feel overwhelming, but the first step is to review your current employees making less than the new salary threshold of $844 per week to determine who now qualifies for one of the FLSA’s three white collar overtime exemptions. Or, any other changes that need to be made.

You can also click here for a detailed Small Entity Compliance Guide provided by the DOL that outlines more information on the rule itself as well as how to stay compliant. And don’t forget that the next price increase goes into effect on January 25, 2025.

Premier HR Solutions is here to help if you have further questions about how this new overtime rule will affect your business, or need assistance with adjusting your current compensation structure or reclassifying exempt employees. Schedule a call with one of our HR Advisors at the link below.


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