People mostly think of overtime wages as a right for hourly workers. Those with unpredictable schedules and variable paychecks at least 150% of their typical hourly wage if they put in more than 40 hours during the work week. In many cases, employees paid on a salary basis do not qualify for or receive overtime pay.
Their salary effectively makes them exempt from overtime payroll. However, not all workers with a salary are automatically exempt from overtime pay rules. In fact, the pool of salaried workers who may be eligible for overtime pay is likely to increase in the near future thanks to changing federal policies.
Salary requirements have increased
Many companies look for ways to bypass laws that increase their operating expenses. Employers could offer workers low salaries and then ask them to work so many hours that the pay they receive dips below minimum wage. To prevent such abuses from occurring, the federal government establishes a minimum exempt salary.
Workers with salaries below the federal threshold have a right to receive overtime pay when they put in more than 40 hours in a single work week. The rule establishing the exempt salary has changed. The previous rule, set in 2019, established a minimum salary of just $35,568. Inflation is one of the reasons that federal authorities have adjusted that threshold.
As of July 1st, 2024, a salaried worker is only exempt from overtime payrolls if they make $43,888. That isn’t the only adjustment underway. The threshold increases again at the beginning of 2025. At that point, anyone making less than $58,656 could be eligible for overtime wages.
Additionally, federal authorities now have an obligation to review the exemption threshold every three years and adjust it to ensure that companies can’t abuse low salaries to take advantage of certain employees. Workers may soon benefit either from a reduction in how much a company requires them to work or an increase in their take-home pay.
In cases where employers do not conform to those new rules, workers may need to file wage and hour claims to pursue their unpaid overtime. This is just one example of why tracking changes to federal rules can help people protect themselves against unfair treatment and underpayment.
