Are You Prepared for the Minimum Wage Increases in July?

The Federal Department of Labor announced that an increase in minimum wage for exempt employees will be effective on July 1, 2024. On that day, most salaried employees will be eligible for overtime pay if they make less than $43,888 annually ($844 per week). This will increase to $58,656 annually ($1,128 per week) on January 1st, 2025. The current Federal minimum wage for exempt employees is $35,568 annually ($684 per week). 

Employers will need to determine if they will be increasing their exempt employees salaries to the required amounts or if they will reclassify their salaried employees to nonexempt (hourly) meaning they will be eligible for overtime.

It is important to also understand that even if an employee’s salary is above the exempt minimum wage, their job duties must also be considered to ensure they fall into one of the categories of workers that can be considered as exempt. These categories include Executive, Administrative, Professional, Outside Sales and Computer Employees.

Some states, such as California, have higher exempt minimum wage requirements and employers in those states need to follow the higher wage for their exempt employees.

Note: Several business associations in Texas recently filed lawsuits against this new rule. There may be a preliminary injunction of the rule before July 1st or it may be allowed to go into effect. It is important to monitor this development to determine an employer’s next steps.