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October 28, 2024
Phase two of changes to the federal minimum salary requirements for exempt employees are underway. Your business must act now to stay compliant. The new rules require careful planning to ensure your workforce is properly compensated under the Fair Labor Standards Act. Here’s what you need to know about the upcoming changes, how they affect your business, and the steps to take to comply.
The U.S. Department of Labor recently updated the federal minimum salary requirements for exempt employees. The changes are rolling out in two phases:
This increase is equivalent to the federal minimum wage for salaried workers and ensures fair compensation for exempt employees.
This classification covers executive, administrative, professional, or outside sales employees who are paid a salary and are not eligible for overtime.
The new salary threshold changes for exempt employees apply to all U.S. employers, regardless of business size or industry. If you have exempt workers who are paid on a salary basis, they must meet the new minimum salary levels.
Some states have set higher exempt employee salary thresholds than the federal requirements. In these cases, employers must comply with the higher state threshold.
For example, if your business operates in California, where the minimum salary for exempt employees is already above the federal limit, you must follow California’s law. States with higher thresholds include:
Additionally, certain professions, such as computer professionals and highly compensated employees, may have different salary requirements. An HR services provider can help you determine which laws are applicable to your business.
Failing to comply with federal (or state) salary requirements could result in serious consequences for businesses. Employers who do not meet the minimum salary thresholds must pay back wages to underpaid employees. This could also include penalties and interest if an investigation reveals the violation was intentional.
Employees can file wage claims with the Department of Labor if they believe they are paid below federal or state requirements. For larger businesses, non-compliance could lead to class action lawsuits from groups of underpaid employees.
Staying compliant is not only a legal obligation. It’s also a safeguard against potential financial and reputational risks.
To ensure your business complies with the new federal minimum salary requirements for exempt employees, follow these steps:
Navigating the new salary threshold changes for exempt employees can be complex, especially when state laws come into play. Escalon’s People Operations team can help your business ensure compliance and avoid costly penalties. We can assist you with:
If you need expert guidance on the new federal minimum salary requirements for exempt employees, contact Escalon today. Our professionals can cover all your essential back-office HR needs to help your business stay on track.
Our team is made up of seasoned professionals who bring years of industry experience to the table. You gain a trusted advisor who understands your business inside out.
Say goodbye to the hassles of hiring, training and managing in-house finance teams. You will never have to worry about unexpected leave of absence or retraining new employees.
Whether you’re a small business or a global powerhouse, our solutions scale with your needs. We eliminate inefficiencies, reduce costs and help you focus on growing your business.
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