It’s been a busy two years in Department of Labor rulemaking, especially as it pertains to Wage & Hour laws and regulations. One area in particular we’ve been speaking with clients and colleagues about is the evolving overtime exemption which takes effect on July 1, 2024. It’s a topic Hunter Law Firm Founder and Attorney Anne Hunter spoke about at the Tennessee Bar Association Labor & Employment Forum in May.
The overtime exemption is one of several Wage & Hour changes we’ve closely tracked and are assisting clients and colleagues with. We want to delve further into these changes to make sure the people of Tennessee better understand their rights in the workplace and are able to navigate any challenges related to these matters.
Department of Labor Raises the Overtime Salary Exemption
Right off the bat, we want to dispel a common misconception about being a “salaried employee” vs. an “hourly employee”: BOTH hourly and salaried employees are eligible for overtime in some circumstances. Some employers know a position will be working extensive overtime hours and simply make that position salaried in an attempt to avoid paying for the extra hours of hard work, but it’s not that simple.
Starting on July 1, 2024, the Department of Labor’s standard salary level will rise from $684 per week to $844 per week (equivalent to $43,888 annually) and the highly compensated employee level will increase from $107,423 per year to $132,964 per year. What this means is more employees will now be eligible for overtime as the bar to achieve an exemption is higher.
For example, if you currently make $750 per week as a salaried employee then you wouldn’t be eligible for overtime. Now, you will fall under the $844 salary level. The same is true for those whose salary was above the $107,423 compensation standard but below the new $132,964 standard.
It’s important to note that these numbers will change again on January 1, 2025, when the Department of Labor will apply a new methodology for calculating these limits by applying the 35th percentile of all weekly earnings for full-time salaried employees in the lowest-wage Census Region and 85th percentile of all full-time salaried employees nationally. This will result in a standard salary weekly limit of $1,128 per week ($58,656 per year) and a highly compensated employee limit of $151,164. These numbers will then be updated on July 1st every three years thereafter using the 35th and 85th percentile standards.
We want to note that this is a hotly-contested issue that’s likely to face opposition in the 5th Circuit, similar to a previous attempt at these changes that was blocked in a Texas federal district court.
Far-Reaching Impact on Employees and Employers Alike
These changes are expected to have a significant impact on American workers, to the tune of an estimated 3.6 million workers who will become eligible for overtime under the new rules. Certain industries are ripe for an extensive review and consideration of these new rules, especially the hospitality industry (restaurants, delivery drivers, hospitals, etc.).
Any industry where salaried workers are generally receiving low to modest wages but are working extensive hours will need to reconsider their pay structure to avoid excess and unpaid overtime wages. We understand that even honest employers struggle with these laws, but it doesn’t mean the workers are the ones who need to pay for any misunderstandings or misappropriations of these rules.
What Are the Penalties for Unpaid Overtime Wages?
Employers who are found to have been underpaying employees, intentionally or unintentionally, will face stiff penalties from the DOL and courts that prosecute these offenses. For example, even employers who discover and admit their mistake when faces with litigation are often required to pay back double the amount of unpaid overtime wages.
Essentially, the courts agree that the impact of unpaid wage cases isn’t narrowed to the impact of not being paid. The lost wages could have improved someone’s circumstances and allowed them to pursue additional opportunities in their personal or professional lives that were otherwise closed off to them due to underpayment.
Hunter Law Firm Defends Your Right to Be Paid For Your Work
We take pride in staying up to date on these changes to make sure our clients have the best and most accurate representation in unpaid wages, overtime violations, and other Fair Labor Standards Act cases. We represent the people of Tennessee and help them get back the money they’re owed for their hard work.
If you feel like you’ve been underpaid, unpaid, or taken advantage of by your employer in Tennessee, contact Hunter Law Firm today.
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