FLSA Overtime Rule Has Been Updated – Significant Changes

November 4, 2024 | Charter Administration

Note the second change takes effect January 1, 2025

On April 23, 2024, the U.S. Department of Labor announced an updated, final rule for overtime pay under the Fair Labor Standards Act (FLSA). Changes to minimum salary threshold are scheduled to go into effect in a series of stages, with the first change effective July 1, 2024, then January 1, 2025, then every 3 years after.

Specifically, the changes are:

Increase the “standard salary level” (threshold) from $684 to $844 per week as of July 1, 2024 (equivalent to $35,358 per year raised to $43,888 per year).
Increase the “standard salary level” (threshold) from $844 to $1,128 per week as of January 1, 2025 (equivalent to $43,888 per year raised to $58,656 per year)
Raise the total annual compensation level for “highly compensated employees (HCE)” from $107,432 to $132,964 (July 1, 2024) and $151,164 (January 1, 2025) per year.

Register now for the newly-updated online course: FLSA: From Basics to Advanced Topics

In summary, the chart below details the changes to come to salary minimums for exempt employees. If employees are not paid these minimums, the employee will no longer be exempt and will be eligible for OT.

This means, for employees who fall under the new salary thresholds, you will have to either increase their salary to meet the minimum or track hours and pay overtime on any hours worked beyond 40 each week.

Special Notes and Exceptions

The duty test still applies, and in addition to meeting the minimum salary threshold requirements, an employee must meet a qualifying duty to be exempt from OT. See fact sheet 17A for detail on qualifying duties. https://www.dol.gov/agencies/whd/fact-sheets/17a-overtime
Exception! Teachers (and coaches) whose primary duty is instruction (or coaching) are excluded from the FLSA – meaning the salary test does not apply, so there is no minimum on what you can pay them according to FLSA. This is not the case for teacher aides or assistants and others who are not doing the actual instruction as their primary duty. See Fact Sheet 17D from the DOL for more information. https://www.dol.gov/agencies/whd/fact-sheets/17d-overtime-professional
Highly Compensated Employees – The amount to qualify as a highly-compensated employee will also increase. This is detailed in the articles linked above. For highly-compensated employees, the duty test does not apply. If any employee is paid in the highly-compensated range, they are exempt and not subject to OT. No duty test is required for exemption.
For employees that do not work year-round, you calculate their minimum annual salary base on the weekly FLSA wage minimum. To calculate their annual minimum earnings, look at their duty calendar and count the number of weeks during which they work even 1 day. Then multiply the weekly minimum ($1,128 as of Jan 1) by the number of weeks they will work. That will result in the minimum annual salary they must be paid to be exempt. The duty test still applies, too.

What should you do now to prepare?

Review the FLSA classification of your non-teacher, non-coach employees by assessing, first, their duties.
- Ensure that employees are properly classified as exempt or nonexempt based on duties.
- Note that the job title of a position is not significant in assessing duties. It is the actual work performed that matters.

Calculate the weekly pay amount of these employees by taking their annual amount paid divided by the number of weeks in which they perform any work.
- For year-round employees, this will be 52 weeks. However, especially in a school setting, some employees may work less than 52 weeks in a year depending on their duty calendar.

If the employee earns less than the salary threshold minimum detailed above per workweek, consider two options:
- Option 1: Raise the employee’s salary to meet the new minimum threshold; or
- Option 2: Reclassify the employee to nonexempt, for which they will track hours, be paid based on number of hours worked each week, and become eligible for overtime pay for any hours in excess of 40 in a workweek.

Need help?

CSS is here to partner in all your HR efforts, including determining pay classification status of your employees and implementing action plans to maintain compliance with the ever-changing DOL rules. Contact Jordan Elliott, COO for more information.

More Resources

The official news release from the U.S. Department of Labor is here, at which more information is available:

Register now for the newly-updated online course: FLSA: From Basics to Advanced Topics

Want to discuss?

Visit the Charter School Community Roundtable to ask questions and discuss this topic now.