Florida employers with employees working more than 40 hours in a week need to pay overtime unless specific exemption criteria are satisfied. One of these is known as the minimum salary requirement, which is set to increase on June 1, 2024, and again on January 1, 2025. The U.S. Department of Labor (DoL) has issued a final rule affecting how Florida business owners can classify exempt and nonexempt employees under the Fair Labor Standards Act (FLSA), particularly for executive, administrative, and professional employees (EAP employees) and highly compensated employees. Here’s what you need to know to keep your business in compliance with these changing overtime exemption thresholds.
The DoL allows for certain federal overtime exemptions to be made for EAP employees as defined by their regulations. These definitions break down as follows:
To qualify for an EAP overtime exemption, the employee must also meet the DoL’s set salary threshold. The new federal overtime exemption rule increases the original EAP exemption threshold of $684 a week ($35,568 annually) to:
Florida businesses can also obtain exemptions for highly compensated employees. These are employees who primarily do office or non-manual work, regularly perform at least one exempt duty of an EAP, and are paid a salary that meets the DoL’s specific threshold. Under the new rule, the previous exemption threshold of $107,432 annually at a minimum rate of $684 a week will be increased to:
Under the new federal overtime exemption rule, salary and compensation thresholds will be updated every three years using up-to-date wage data. Following this year’s change, the next update will occur on July 1, 2027. The DoL says that this will help ensure that their tests and standards will keep up with changing economic conditions. Under the new rule, the DoL also has the authority to temporarily delay these periodic updates due to unforeseen circumstances. It’s important to note that the DoL can still issue other new rules in the future, too.
First, gather all your compensation data for your exempt employees and sort out those who fall short of the new overtime exemption threshold. Next, review your Florida business’s budget and employment agreements while looking for positions that can be restructured, reclassified, or given a raise to meet the DoL’s exemption standards. You will then want to calculate if it would be more cost-effective to raise employee salaries or to reclassify their positions.
As you do this, keep in mind that you need to consider both salary and job duties when dealing with reclassification. It’s also important to think long-term here because of the DoL’s scheduled changes moving forward. For more guidance on preparing your Florida business for the DoL’s new rule, you can review their small entity compliance guide here. Be sure to take action now, or else your Florida business could end up paying out far more in overtime than it would otherwise.
If an employer fails to meet the exemption threshold under the DoL’s new overtime rule, then they can make a final, one-time catch-up payment to bridge the gap. However, this must be done before the first pay period of the next year, or the employee will be entitled to that year’s overtime pay.
Does your Florida business need help navigating the DoL’s new overtime exemption requirements? Contact our corporate law firm today for legal assistance with your Florida business’s employment agreements or to consult with an attorney about how to move forward by scheduling with us online or by calling us at (727) 279-5037.