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DOL Final Overtime Rule: What Does it Mean for Your Business?

Contributor: Judy Liang, aPHR

May 8th, 2024 | 4 min. read

By Tony Calavitta

The Department of Labor (DOL) published a change to the standing rules for overtime pay.

Effective July 1st, 2024, the overtime exemption for employees in white-collar occupations will undergo a significant shift with increases to both standard salary and high salary employee compensation thresholds.

As you gear up for these changes, it's critical to understand and prepare for the impact these adjustments will have on your business.

In this article, we'll explore the most important aspects of the new overtime rule changes, detailing the information you’ll need to navigate these waters successfully. From understanding the new salary thresholds to implementing proactive compliance strategies, we'll provide you with a comprehensive approach to managing these changes effectively.

Read on to ensure that your business remains compliant and ahead of this crucial regulatory update now and into the future.

Here's the bottom line: The “WHAT” of the final overtime rule

More employees will now qualify for overtime pay.

Here’s the bottom line, explained: The “WHY” of the final overtime rule

The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, and other workplace standards.

Among these standards is the salary threshold that determines whether or not employees are eligible for overtime pay. This threshold hadn't been significantly adjusted in years. As a result, a growing number of salaried workers, despite putting in extended work hours, weren't eligible to receive overtime pay.

The DOL's goal with these new regulations is to ensure fair compensation practices that better reflect current economic realities.

A comparative look at the FLSA overtime rule

Previously, salaried workers making at least $684 per week or $35,568 annually were exempt from overtime. Starting July 1st, 2024, that number will jump to $844 per week or $43,888 annually. And, this overtime salary exemption will increase again on January 1st, 2025, rising to $1,128 per week or $58,656 per year.




Before July 1, 2024

$684 per week

(equivalent to $35,568 per year)

$107,432 per year, including at least $684 per week paid on a salary or fee basis.

July 1, 2024

$844 per week

(equivalent to $43,888 per year)

$132,964 per year, including at least $844 per week paid on a salary or fee basis.

January 1, 2025

$1,128 per week

(equivalent to $58,656 per year)

$151,164 per year, including at least $1,128 per week paid on a salary or fee basis.

July 1, 2027

(And every 3 years thereafter)

To be determined by applying to available data the methodology used to set the salary level in effect at the time of the update.

To be determined by applying to available data the methodology used to set the salary level in effect at the time of the update.


In addition to these scheduled changes, the ruling also provides future updates to the standard salary level and highly compensated employee total annual compensation threshold every three years to keep up with economic fluctuations.

What this means for your business

Nervous about the financial implications of new overtime rules?

While navigating these changes can pose challenges, especially for smaller businesses, there’s no need to worry! We've got practical strategies to help you manage the upcoming changes smoothly (And, no, they do not involve hiding under your desk).

Here are 5 smart ways your business can adapt to the new overtime rules without breaking your budget:

Proactive compliance: Preparing for the new overtime rule

First things first: Be ready.

Here are several steps you can take to make sure this change does not catch you off guard:

1. Audit your current payroll:

Conduct a thorough review of your payroll records. Identify all your salaried employees and compare their current salaries against the updated exemption thresholds. Also review job descriptions to confirm that duties align with exemption criteria.

2. Evaluate financial impact:

Should you increase salaries to maintain exemptions for key employees who consistently work long hours? Or is it more practical to retain current salaries and manage overtime costs?

Undertaking a detailed cost-benefit analysis is critical to navigating these changes. To do this effectively, you should consider the immediate financial impact of this new salary threshold as well as factors like employee morale and competitive posture in your industry.

3. Make informed decisions:

Now that you've crunched the numbers, it's decision time! Will you make changes to your current operations to prevent overtime expenditure? Or will you maintain your current dynamic amidst the requirements of this new rule?

For some key roles, a raise might be the best option to keep them exempt. But for others, reclassifying them as non-exempt could be more cost-effective. Think outside the box – maybe hiring part-time employees or reshuffling teams could spread out overtime hours more evenly.

Remember, the goal here is to find solutions that align with your business goals and HR policies.

Strategic compliance: Adapting to new overtime regulations

Consider these two additional solutions for managing overtime complexities:

4. Optimize work schedules:

Is it possible to adjust work schedules to reduce overtime costs? Consider implementing compressed workweeks, promoting regular breaks during the day, and establishing clear expectations for start and end times. Efficiently managing time can significantly reduce overtime expenses.

5. Enhance operational efficiency:

Consider investing in new technology, streamlining processes and workflows, or providing additional training to enable your team to work optimally. While increasing efficiency may not immediately resolve overtime challenges, it will certainly contribute to reducing the continued necessity for overtime

Long-term compliance: Beyond the immediate steps

While the strategies above provide a solid foundation for adapting to the new overtime rules, here are a few ways to ensure that you sustain compliance across your organization.

Invest in employee education:

Conduct educational workshops to inform your employees about the updated overtime regulations. Clarify the implications these changes could have on their work schedules and compensation. Providing this knowledge not only empowers your team but also promotes a sense of responsibility and minimizes misunderstandings.

Promote work-life balance:

The updated overtime regulations are designed to promote a healthier work-life balance. Evaluate and, if necessary, revise your company policies to align with this objective. Consider introducing flexible work arrangements, advocating for regular breaks, and facilitating disconnection after hours. Such initiatives can lead to a more content and healthier workforce, which can increase productivity and reduce a reliance on extensive overtime.

Support a culture of communication:

Ensure communication channels remain open, allowing employees to freely express any concerns or questions about the new regulations. Actively seek feedback from your team and respond swiftly to their inquiries and issues. Implementing an open-door policy enhances trust and facilitates the early detection and resolution of potential challenges.

Leverage technology for compliance

Technology can be a powerful tool for ensuring compliance. Consider investing in payroll management software that automatically tracks hours worked and calculates overtime pay according to the latest regulations. This can save time and minimize errors associated with manual calculations.

Ready to embrace regulatory change for organizational improvement?

The new overtime regulations present a valuable opportunity for transformative growth within your organization.

By strategically implementing the outlined measures, your company can enjoy the following advantages:

  • Enhanced compliance
  • Elevated employee morale
  • Increased operational efficiency
  • Competitive advantage

By embracing these changes and fostering a culture of compliance, you can position your business for long-term success against the ever-evolving future of labor laws.

Ready to conquer compliance? Let's talk!

Don't let the new overtime regulations become a headache. Let us help you turn this rule change into an opportunity for growth and success.

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This article is not intended to be exhaustive nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel for legal advice.