What a week!
On the same day that the Federal Trade Commission announced its plan to ban most employee noncompetes, the U.S. Department of Labor proposed increase to the salary level for EAP overtime exemptions.
Employees are exempt from the Fair Labor Standards Act's minimum wage and overtime protections if employed in a bona fide executive, administrative, or professional (EAP) capacity. As the DOL noted in its announcement, employees must generally satisfy three criteria to be exempt from overtime in an EAP capacity:
- they receive a salary, i.e., a predetermined and fixed amount that is not subject to reduction because of variations in the quality or quantity of work performed;
- they get paid at least a specified weekly salary level; and
- they primarily perform executive, administrative, or professional duties.
Employees may also be overtime-exempt if they satisfy the alternative test for certain highly compensated employees who are paid a salary, earn above a higher total annual compensation level, and satisfy a minimal duties test.
The final rule will increase the standard salary level and the highly compensated employee total annual compensation threshold on the rule's effective date on July 1, 2024, and on January 1, 2025. The final rule also provides for future updates of these levels every three years to reflect current earnings data. These scheduled increases are displayed below.
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