This week the U.S. Department of Labor announced the finalization of a new rule: “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees.” Set to take effect on July 1, 2024, this rule revises the national salary thresholds necessary for these employees to meet the salary threshold portion of the test to be exempt from the overtime and minimum wage provisions of the Fair Labor Standards Act (FLSA). The first increase is from the current $684 a week ($35,568 per year) to $844 a week ($43,888 per year), then on January 1, 2025 rises to $1,128 per week ($58,656 per year), with additional increases on July 1, 2027 and every three years thereafter. The purpose of the increases is to reflect changes in wage growth and the cost of living since the last update, to ensure the exemptions apply appropriately to the intended employees.

For Washington state employers, it is important to remember that Washington’s salary thresholds for exempt employees are higher than the federal standards. Washington employers must ensure that they meet these state-specific requirements to maintain compliance. The Washington State Department of Labor & Industries (L&I) determines minimum thresholds using a multiplier of the state minimum wage. In 2024, for both small (1-50 employees) and large (51 or more employees) businesses, an exempt employee must earn a salary of at least 2.0 times the minimum wage, or $1,302.40 per week ($67,728 per year).

Employers are encouraged to review current payroll practices and consider necessary adjustments to meet all current salary threshold requirements for exempt employees.