The Department of Labor announced a final overtime rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees, on April 23, 2024. The rule revises the regulations issued under the Fair Labor Standards Act (FLSA) that implement the exemptions from minimum wage and overtime pay requirements.

The first phase of the rule becomes effective July 1, 2024, and the second phase becomes effective January 1, 2025. This final rule has the potential to impact a significant number of currently overtime-exempt employees. So what should you do to get started?

The first step is to find out if any of your current employees will be impacted by this change. If none will be, no changes are necessary. However, if you realize you will have impacted employees, here is a quick guide on how to get started.

Steps to Take if Employees Are Affected:

Analyze Current Salaries

The first step is to evaluate the current salaries and estimate the amount of overtime worked. To help with this, feel free to use the 2024-2025 Salary Increase Impact Calculator for assistance.

Budget Adjustments

This is where it's time to think ahead. As 2025 budgets begin to happen, be sure to allocate funds for potential increases in salaries and overtime expenses affected by this change.

Develop a Detailed Rollout Plan
Exemption Status and Role Classification- Determine whether currently exempt employees will remain exempt or be reclassified as non-exempt.
  • Helpful Tip: You cannot have two employees in the exact same role, and one be exempt and one be non-exempt. You will need to reclassify one of the roles, and this doesn't just mean a job title. To be compliant you will need well-documented differences in responsibilities along with an updated and clearly differentiated job description. Because of this, you should consider implementing salaried, non-exempt roles.
Operational Adjustments
  1. Time-Keeping Changes: This is the time you should begin to prepare for any changes in time-keeping processes due to the new overtime requirements.
  2. Employee Communication: Address potential employee concerns through clear communication and manage employee relations.
  3. Policy Review: Ensure company policies, such as “Unlimited PTO,” comply with the new regulations.
Staged Implementation

Once you have a plan of action, decide whether to implement the changes in two stages, in line with the 2025 increase, or in one go. Before you do this, we recommend that you review potential salary compression issues and adjust market rates for various positions accordingly.

Support and Resources

We know this is a lot to take in, but don't worry our FPC HR Team is here to help. If you are a current HR client, don't worry we are already evaluating your business and will reach out to you if changes are needed. However, if you don't have HR services with us and would like assistance, reach out to us today. These changes can create a lot of questions and what-ifs. Our team is happy to work closely with those affected providing guidance and advice on how to navigate these adjustments- let us be the experts.

If you have any questions or would like to schedule time with our HR team, click here.

Back to Blog

Keep in Touch

Enter your email address to sign up for our free and informative newsletter.