Understanding the U.S. Department of Labor’s New Overtime Rule


Estimated reading time: 3 minutes

As a business owner, it’s crucial to stay current and comply with national labor laws. This not only helps you avoid penalties but also ensures a content workforce. 

Effective July 1, 2024, the standard threshold will increase from $684 per week to $844 per week. There is a second increase to $1,128 per week scheduled for January 1, 2025. Click the link to read the final rule from  U.S. Department of Labor (DOL).

The threshold will be adjusted periodically for highly compensated employees (HCE). Starting July 1, 2027, salary thresholds will be updated every three years based on up-to-date wage data.

The rule will take effect in two phases, and the updates are intended to keep pace with changes in worker salaries and give employers a predictable schedule for future adjustments. 

Impact of the New Salary Levels

Lower-paid salaried workers often do the same job as their hourly peers for no additional pay. So, while hourly employees receive compensation for their extra time, salaried employees spend more time away from their families and have a lower quality of life-work balance. 

Enacting this rule has the potential to boost employee morale and retention and provides more economic security to those who work longer hours without overtime pay. It also provides clear guidance for employers on how to pay employees for overtime hours.

What This Means for Your Business

This new rule significantly impacts your business and increases the salary threshold for white-collar workers to be exempt from federal overtime requirements under the Fair Labor Standards Act (FLSA). That’s why it’s important to evaluate your salary structures and overtime practices to ensure compliance. Here are some steps you should consider as you adjust to the ruling.

  • Review and adjust payroll practices to comply with the new rules. It’s essential to review your current employees’ classifications to determine if they will still qualify as exempt under the new guidelines. This involves evaluating both their job duties and current salaries.
  • Ensure fair compensation for long hours worked. Starting July 1, 2024, closely track the hours worked by employees earning less than $43,888 annually. For those who qualify, you’ll want to ensure they’re being compensated for their overtime. 
  • Maintain precise records of hours worked. To ensure compliance and to be prepared for any potential audits, detailed recordkeeping will safeguard your business from penalties.
  • Communicate changes to affected employees. You should let all employees who primarily perform executive, administrative, or professional duties, as provided in the Department’s regulations, know about these new changes as they’ll be directly affected. You should also train HR and payroll staff on the new requirements. 

Simplifi’s Solutions for the Overtime Rule Expansion

With the new overtime rule on the horizon, Simplifi’s streamlined time-tracking solution is here to alleviate your concerns. Our all-in-one platform offers real-time insights into compensation and time tracking. This means you can manage your team from anywhere, whether in the office or on the go, with confidence and ease. 

Beyond time tracking, we offer comprehensive HR support, including updating handbooks and company policies. You can also review hiring rules and laws right there on the platform. If you don’t know where to begin, our certified HR professionals are ready to assist you in ensuring compliance and optimizing your HR processes.

Stay Compliant and Up-to-Date on Labor Laws With Simplifi

Staying compliant with labor laws is not just a legal obligation, it’s a commitment to your employees’ well-being and your business’s success.

Contact us at 215-437-7110 to learn more about our services and how we can benefit your business.

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