Federal Overtime Changes Effective July 1, 2024

Important note: A federal district court has issued an injunction in a lawsuit filed by the office of the Attorney General, State of Texas versus U.S. Department of Labor, that blocks the new U.S. Department of Labor overtime rule from going into effect for Texas government employees. State agencies and institutions of higher education should not make any changes to their employees’ FLSA exemption status at this time based on the new salary thresholds described below. Additional updates will be provided as this lawsuit progresses.

Notice to state agencies and institutions of higher education: U.S. Department of Labor (DOL) rules on the white-collar exemption from the Fair Labor Standards Act (FLSA) minimum wage requirements are changing effective July 1, 2024.

Note: The Texas Comptroller of Public Accounts does not provide guidance on FLSA, overtime exemptions or related issues.

On April 23, 2024, the DOL announced a final rule which updates and revises the regulations issued under section 13(a)(1) of the Fair Labor Standards Act implementing the exemption from minimum wage and overtime pay requirements for executive, administrative, and professional (EAP) employees. The DOL last updated these regulations in 2019.

The final rule:

• Raises the salary threshold to $844 a week or $43,888 a year (up from $684 a week or $35,568 a year).
• Raises the total annual compensation level for “highly compensated employees (HCEs)” to $132,964 (up from $107,432).
• Provides a mechanism for the timely and efficient updating of the standard salary and HCE total compensation thresholds to reflect current earnings data.
• Does not change any of the existing job duty requirements to qualify for an exemption. Both the standard duties tests and the highly compensated employee duties test remain unchanged.

Note: Effective Jan. 1, 2025, the salary threshold increases to $1,128 a week or $58,656 a year and the HCE total annual compensation threshold increases to $151,164.

These amounts will be adjusted again effective July 1, 2027, and then every three years thereafter.

Agencies and institutions should review information about their FLSA exempt staff and determine the effect, if any, of this change. For more information, see:

• Frequently Asked Questions - Final Rule: Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees on the DOL website.
• Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees in the Federal Register.