On April 23, 2024, the U.S. Department of Labor (DOL) published a final rule that raises the minimum annual salary threshold for executive, administrative, professional, outside sales, and computer employees to classify those employees as exempt from overtime rules under the Fair Labor Standards Act (FLSA).

Currently, the minimum salary requirement for the “white collar” exemptions (executive, administrative, and professional) is no less than $844 per week ($43,888 per year) as of July 1, 2024. Under the DOL’s Final Rule, this amount will increase to:
• $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 Final Rule contains further automatic increases to these “white collar” exemptions every three years, beginning on July 1, 2027, based on then-current earnings data. These automatic increases will be published by the DOL within 150 days prior to implementation. 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 which began on July 1, 2024, and $151,164 beginning on January 1,
2025. This HCE threshold will also be subject to automatic three-year updates starting July 1, 2027.

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.

Updated NADA Guide Released To Assist Dealers NADA released its updated edition of A Dealer Guide to Federal Wage and Hour, Child Labor, and Wage Discrimination Compliance.

In addition to updates regarding new salary thresholds, the Guide provides an overview of basic requirements for dealers to comply with federal laws. The guide also includes information on salesmen and commission employees, equal pay and compensation discrimination avoidance, and recordkeeping requirements.

Dealers may need to reclassify some overtime exempt employees as non-exempt and require justification for classifying some employees as non-exempt. The guide is available online at: https://apps.paa.org/files/2024NADAWageHourGuide.pdf

Lawsuits Pending
The new overtime rule is in effect for employers. Dealers should be aware, however, the questions remain regarding the rule’s viability in the face of legal challenges.

Multiple lawsuits are pending in federal courts challenging the rule, and federal courts may issue decisions on these legal challenges before the overtime rule’s second deadline on January 1, 2025.

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