Wage and Hour Update: Salary Basis Increase Now in Effect

A federal court in the Eastern District of Texas halted enforcement of the salary threshold increases following challenges to the U.S. Department of Labor’s Final Rule – Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees, which amends the regulations at 29 CFR part 541 under the Fair Labor Standards Act. This stay of enforcement applies to the State of Texas, only. The Court also consolidated another pending challenge by various business industry groups. The Court ordered additional briefing on the consolidated matter.

What does this mean for employers?

For now, unless you are a governmental employer in Texas, the DOL’s Final Rule has gone into effect.

The Final Rule increases the standard salary level and the total annual compensation requirement for employees as follows:

• On July 1, the standard salary level for administrative, executive, and professional employees must equal at least $844 per week. Highly Compensated Employees must receive annual compensation totaling at least $132,964.
• On Jan. 1, 2025, the standard salary level for administrative, executive, and professional employees must equal at least $1,128 per week. Highly Compensated Employees must receive annual compensation totaling at least $151,164.

The job duties test was not modified in the Final Rule.

What should employers be doing now?

Companies should audit their exempt classifications. In doing so, companies should undertake the following process:

• Identify all exempt classifications;
• Compile and review job descriptions for accuracy;
• Review salary ranges for each classification. Ensure salaries meet the new July 1 threshold; and,
• Ensure proper time keeping practices for all non-exempt employees.

If you need assistance conducting your wage and hour audit, please contact Maria F. Dwyer at mdwyer@clarkhill.com, Hannah K. Reisdorff at hreisdorff@clarkhill.com, or your Clark Hill attorney.

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