Administrative and Executive Overtime Exemption Just Got Harder

Last week, the Biden administration announced changes to the Wage and Hour rules regarding exemptions from overtime. Many employers put administrative and executive type employees on salary and expect them to be exempt from overtime. Salaried doesn’t necessarily mean they are exempt on its own. These new rules will make that exemption a good bit harder to take and could significantly affect our members.

As mentioned above just because you pay an employee a salary it doesn’t mean that they are automatically exempted from overtime. It is possible to pay someone overtime when they are on salary but that is beyond the scope of this article.

The most common “misclassification” violation we have seen in gins over the years is claiming an employee is exempt from overtime when they are not. In order for the executive or administrative employee to be exempt from overtime they must meet two things. The first is the duties of the job must meet the exempt duties and they must be paid above a certain amount on a salary basis. The duties have not changed and can be found in the Fact Sheets HERE.

What has changed is the minimum weekly salary that these employees must be paid in order to qualify even if they meet the duties of executive, or administrative work. Beginning July 1, 2024, employees must make $844 per week or $43,888 per year and starting January 1, 2025, employees must make $1,128 per week or $58,656 per year. The next change will be determined by the department by a formula by July,1 2027.

What does this mean? Many gins use the executive or administrative exemption for key office and gin employees. Careful consideration of these new pay levels in combination with the duties found in the Fact Sheet 17 linked above must be given. It is very easy to mis-classify a worker as exempt when they’re not and this rule makes it that much harder.

Wage and Hour’s Page on New Rule

You can find information on paying a non-exempt worker a salary. It can be done but it takes some planning. Search the internet for “salaried non-exempt” or “calculate overtime for salaried employee” and you’ll find a lot of articles by attorneys and HR professionals on how to navigate those waters.