New Overtime Rule Takes Effect

Matt Gardiner, CPA, CFE, Audit Manager

Starting July 1, a new rule will make more workers eligible for overtime wages. The threshold for exempt executive, administrative, and professional employees will increase from $35,568 to $43,888, making an estimated 1 million additional workers eligible for overtime pay. On January 1, 2025 this threshold will rise further to $58,656, adding 3 million more eligible workers.

This goal of this change is to raise wages for low- and middle-class Americans, despite previous legislative obstacles in raising the federal minimum wage. The new rule is likely to face legal challenges from industry groups concerned about regulatory and financial burdens. Businesses might respond by increasing base pay, converting salaried workers to hourly employees, or limiting salaried employees to 40-hour workweeks.

The salary threshold adjustments will continue every three years starting July 1, 2027, based on updated wage data.