Effective July 1, 2024, the minimum salary required for the EAP (Executive, Administrative, Professional) exemptions from overtime will increase from $684 per week to $844 per week (equivalent to $43,888 per year). Also, the minimum total compensation requirement for the HCE exemption will increase to $132,964 per year, including at least $844 per week, which must be paid on a salary or fee basis.

Employers continue to be permitted to use nondiscretionary bonuses, incentive payments, and commissions to satisfy up to 10 percent of the minimum salary requirement ($84.40 per week in the second half of 2024) for the administrative, professional, and executive exemptions, as long as these forms of compensation are paid at least annually.

Currently, to fall within the executive, administrative, and professional (EAP) employee exemptions, an employee generally must:

  • Be paid a salary, meaning that they are paid a predetermined and fixed amount that is not subject to reduction because of variations in the quality or quantity of work performed (the “salary basis test”);
  • Be paid at least a specified weekly salary level; and
  • Primarily perform executive, administrative or professional duties, as provided in the DOL’s regulations (the “duties test”).

Highly compensated employees (HCEs) performing office or non-manual work and paid total annual compensation of a specified amount are exempt from the FLSA if they customarily and regularly perform at least one of the duties of an exempt executive, administrative or professional employee identified in the standard tests for exemption.

How does this impact you? Employers must review all employees paid on a salary basis to ensure they meet the salary requirements if they use the EAP salary exemption. If an employee does not meet the salary requirements, the employer can change the employee’s compensation to hourly or increase the salary to meet the salary requirements. Review the job duties tests referenced in the DOL Fact Sheet to determine whether or not an employee can be compensated hourly. (ADP, 6/14/2024)

ADP FLSA & Overtime Rule Guide. Updated 6/14/2024. https://sbshrs.adpinfo.com/flsa

 

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