A low salary does not necessarily exempt someone from overtime pay rules

Companies largely rely on the labor of employees to produce goods or provide services to the public. The work performed by employees allows a company to generate revenue and is, therefore, necessary for profitable operations. However, the cost of securing labor can be one of the biggest recurring operational expenses for a business. Organizations often use a variety of different tactics to minimize staffing expenses. Limiting the number of workers scheduled is one way to control staffing costs. Avoiding overtime compensation is another.

Some companies carefully monitor the schedules for hourly workers to avoid overtime pay obligations. Other companies offer workers a salary to exempt them from overtime pay rules. Some organizations pay the lowest amount they can while demanding a large number of overtime hours from individual employees. The lowest possible salary to exempt someone from overtime rules is about to increase not once but twice.

Two big overtime pay adjustments are on the way

The necessary salary to bypass overtime pay obligations has remained static for nearly half a decade. Thankfully, there is finally an adjustment underway that takes effect this year, followed by a second adjustment at the beginning of next year.

Workers who are currently exempt from overtime pay requirements could soon be eligible for time and a half when they work more than 40 hours per week. As of July 1st, 2024, workers must earn a salary of at least $43,888 to be exempt from overtime pay requirements. That is a substantial increase from the prior threshold of $35,568 established in 2019.

The minimum salary to bypass overtime pay rules increases again as of January 1st, 2025. Anyone making less than $58,656 could be eligible for overtime pay.  Some companies may adjust to these new rules by increasing the salaries they pay their workers. Other employers may simply change their schedules to prevent those with low salaries from performing overtime. Other organizations may violate the rights of workers by failing to increase their wages and refusing to pay overtime.

Workers who understand their wage rights are in a better position to assert themselves after wage and hour violations by employers. Pursuing a wage claim is a reasonable response to a company’s refusal to pay a lawfully competitive salary or overtime wages.

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