The U.S. Department of Labor (DOL)’s Final Rule took effect on July 1, increasing the salary threshold for Fair Labor Standards Act (FLSA) overtime exemptions.

Under the DOL’s new Final Rule, overtime salary threshold amounts increase to:

·                $844 per week ($43,888 per year) on July 1, 2024

·                $1,128 per week ($58,656 per year) on January 1, 2025

Employers may use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary test requirement, provided that such payments are paid on an annual or more frequent basis.

The DOL has also increased the $107,432 annual compensation threshold for the “highly compensated employee” (HCE) exemption. To qualify for the HCE exemption under the Final Rule, employees must earn annual compensation of $132,964 beginning on July 1, 2024, and $151,164 beginning on January 1, 2025. Employers may use nondiscretionary bonuses and incentive payments earned during a 52-week period to satisfy the HCE total annual compensation threshold, but such bonuses and incentive payments cannot be used to satisfy the weekly standard salary level portion of the HCE test.

Questions regarding overtime rules and exemptions continue to be common.

Generally, an employer who requires or permits an employee to work overtime is required to pay the employee premium pay for such overtime work.

Unless specifically exempted, employes covered by the FLSA must receive overtime pay for hours worked in excess of 40 in a workweek at a rate not less than time and one-half their regular rate of pay.

Frequently asked questions and answers are available online at: https://www.dol.gov/agencies/whd/overtime/rulemaking/faqs

Dealers should also review employees’ job duties and written job descriptions to determine if the employee qualifies for overtime exemption. See additional information on overtime exemptions in PAA News Bulletin No. 9 (5/13/24).

Recordkeeping Requirements

Under the Fair Labor Standards Act (FLSA), wage and hour records must be kept for every employee other than management personnel. It is also recommended that detailed job descriptions and written pay plans be maintained for all employees.

See NADA’s A Dealer Guide to Federal Wage-Hour Law and Equal Pay Act for more information on wage/hour recordkeeping.