July 2, 2024
Yes – those new overtime rules – even for salaried employees have now officially taken effect — except if you work in the state of Texas. Which I’ll explain in a second.
I told you in that video back in May — the Department of Labor made the biggest change in decades to overtime rules and which employees are required under federal law to be paid time and a half for working more than 40 hours a week. The Labor Department did that under the Fair Labor Standards Act of 1938. Obviously the salary thresholds have been updated multiple times since 1938. The last time those thresholds were updated was back in 2019.
Now – let me talk about what’s happening in Texas for a second. The state sued the Biden administration to put a stop to these new rules arguing the rule would harm the state as an employer. And a Texas federal judge said o-k and granted a temporary injunction to pause these overtime rules from taking effect but only in the state of Texas. That order does not extend to the rest of the country. This case is still ongoing. And there are other states and organizations still suing over this – so these things can change. But in the meantime, let me explain the new rules your employer has to follow – outside of Texas.
As of July first — salaried workers earning less than $43,888 a year will qualify for time and a half pay if they work more than 40 hours a week. That’s up from the current ceiling of $35,568 dollars a year. Then on January 1 of 2025 the threshold will increase again. Salaried employees working more than 40 hours a week making less than $58,656 a year will be entitled to overtime pay of time and a half. And after that – this new rule says the salary thresholds will be revisited every three years and will be adjusted based on current wage data.
Now there are definitely salaried employees who are absolutely not eligible for overtime. Those employees are called exempt. Obviously if your salary is more than $43,888– you would likely fall into the “white collar” exemption that applies to executive, administrative or professional employees. You do not qualify for overtime pay. Certain computer employees, teachers and outside sales employees are also exempt. And the also law exempts what are called “highly compensated employees” from receiving overtime pay. To be classified a highly compensated employee you have to meet all three requirements. One –you must have a primary duty performing office or non-manual work. Two – you must customarily and regularly perform at least one executive, administrative, or professional duty – that includes the power to hire and fire others *and* three –here’s the change that came on July first— your annual salary is more than $132,964 per year and $151,164 a year starting on January 1st 2025. Previously, the threshold was $107,432 a year. If you meet those three requirements you will not be eligible for overtime pay.
These are now the new federal standards for overtime pay – except in Texas – but these rules do not stop a state from establishing more protective overtime standards. So if a state is more generous with its overtime requirements and it benefits the workers then that standard will trump this new federal one.
Read the Texas Judge’s ruling here.
Read more about the overtime rules here.
