Overtime Exemptions: What is the Overtime Salary Threshold for 2024?

While many states may have their own rules regarding overtime-exempt salary thresholds, every employer should be aware of the rules under the Fair Labor Standards Act (FLSA). 

Here is what you need to know regarding the federal overtime-exempt salary threshold in 2024.

Federal Salary Threshold for Overtime Exemption

As of January 1st, 2020, the federal salary threshold for overtime exemptions is $684 per week. ($35,568 annually)

In other words, any workers who meet the definition of an executive, administrative, or professional employee under the FLSA must also be making at least $684 per week in order to be exempt from federal overtime requirements. 

Note: Each state is different, so it is important to know the overtime laws and requirements of your state as well. For example, here is what you should know on Washington Overtime laws.

Exempt Salary Threshold 2024 Update

On August 30th, 2023, the Department of Labor (DOL) announced a proposed update to the federal salary threshold for overtime exemptions. 

The proposed threshold for 2024 and going forward for overtime exemptions was $1,059 a week ($55,068 annually). 

The DOL has opened the proposed rule for public comment for 60 days, which it will take into account before publishing its final rule (likely sometime in late October early November). The 60-day mark would be 10/29 - 10/30.

What Counts Toward the Overtime-Exempt Salary Threshold?

Important for businesses to know is that nondiscretionary bonuses, commissions, and other incentive payments may satisfy up to 10% of the threshold. 

Example:

If an employee receives $136.80 a week in incentive payments, only half counts toward the threshold ($68.40). 

Furthermore, let's say that same person makes $550 per week. That would make their total weekly compensation  $686.80, over the threshold. However, since part of that sum is beyond the allowed incentivized portion, their total weekly compensation in regard to overtime exemption is only $618.40, under the threshold. Thusly this employee would not be exempt from overtime.

Daily Pay vs. Weekly Pay - Update to Overtime Exemptions

Earlier this year, the U.S. Supreme Court made a new decision regarding overtime exemptions. 

In the case of Helix Energy Solutions Group v. Hewitt, an employee was found to be eligible for overtime as a result of being paid on a daily basis, as opposed to weekly. 

The mentioned employee's total weekly compensation was over the salary threshold, but as a result of being paid daily, the court ruled that "the defendant company didn't pay a salary as defined under the FLSA, and therefore a highly compensated employee was not exempt".

What is important here is simple, in order to be exempt from overtime an employee must be paid, at most, on a weekly basis. 

How Can Employers Better Manage Overtime Exemptions?

It is quite possible, depending on the nature of your business, that tracking overtime exemptions can be really difficult.

While the below factors are great practices to help manage overtime exemptions, it is also important to track and manage overtime in itself, something easily achievable via a modern time and labor system.

Here are some key reminders for successfully and efficiently tracking worked hours for your employees:

1. Capture worked time WHERE it happens When it happens. Avoid having employees report hours after the fact (e.g., filling out a sheet at the end of the week) or having supervisors approve hours from a central administrative office that doesn’t have line of sight of the actual workers posting their hours
2. Capture time worked electronically from the beginning. Every manner of device is now available for workers to clock in and out including purpose-built badge readers, touch screen time clocks, computer kiosks, smartphones, dial in systems, biometric hand readers, tablets, and more.
3. Handle time information only once. Find systems that are unified, and if that is not possible, at least interface. Re-keying is death to efficiency and accuracy.iting down their hours, then having a payroll administrator key those hours into a payroll system, then having a benefits person key those same hours in on an ACA report is inefficient, costly, and prone to error.
4. Make information on worked hours available to those who need it. Make sure employees have visibility to their hours so they can be held accountable. Make sure supervisors can see their direct reports’ hours so they can catch errors early, and make sure managers or department heads can see hours so they can manage overtime and labor budgets, before it is too late.
5. Let your system manage rules, reminders, and notifications. With increased importance around worked hours and the increasing array of regulatory rulings that hinge on worked hours (salary-based overtime exemptions, Affordable Care Act applicable large employer mandates and reporting, municipal and state-mandated sick leave policies, FMLA among others), effective HR and payroll managers lean on their systems to remember deadlines, notify about thresholds, and manage complex and often interconnected labor regulations.

Get Help with Overtime Exemptions and Compliance

Overtime, if not handled properly, can land your business in a world of hurt and legal trouble. To avoid hefty fines and penalties, don't stop with the above list of reminders. 

For starters, ensure you choose a payroll and HR system that is right for your business. One that can save time on HR tasks, and keep track of overtime eligibility, compensation, and hours worked. 

To learn more about what solutions are available from PayNW, contact us today.