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The rules for overtime pay exemptions are about to change

Federal law establishes crucial worker protections, including the right to fair pay. Companies need to provide at least minimum wage, and they may have to pay overtime wages when people work more than the standard 40-hour workweek.

Most workers are eager to earn overtime wages. Receiving 150% of their usual hourly pay can be a big boost to their paychecks. Many companies have the exact opposite sentiment toward overtime. They prefer to avoid paying workers more than their standard hourly wage whenever possible.

One of the ways that companies have historically avoided overtime pay requirements is to hire them on a salary basis. A salary worker could be exempt from overtime wage requirements as long as the salary they receive meets certain federal standards. The rules for an exempt salary are about to change significantly in a way that benefits workers.

Many workers may soon qualify for overtime pay

Since 2019, the minimum salary necessary to exempt a worker from overtime pay requirements has been $35,568. That is a relatively low amount of income for someone who has to work multiple hours of overtime on any given week. Companies often abuse overtime exemption rules by paying employees as little as they can while demanding as much work as possible.

However, the cost of living has increased substantially in the last five years. There is an upcoming salary threshold adjustment that will take effect on July 1st, 2024. At that time, workers need to earn a salary of at least $43,888 to be exempt from overtime pay requirements. That federal threshold increases again on January 1st, 2025. After the beginning of next year, a worker needs to make at least $58,656 to be exempt from overtime pay.

Those who receive lower salaries have a right to receive overtime wages for any hours in excess of 40 that they perform during any particular workweek. Employees typically need to know those rules, as companies count on them being ignorant of their right to take advantage of them.

Pursuing an overtime wage claim is a reasonable reaction when a salaried worker receives unacceptably low wages and no overtime pay. Workers who know their rights are in a better position to hold employers accountable for violating them.