Fair Labor Standard Act (FLSA) Issues Final Rule to Increase Salary Thresholds for Highly Compensated Employees (HCE)
Under the new rule, total annual compensation requirement for HCEs will increase from $107,432 per year to $132,964 per year on July 1, 2024 and will rise to $151,164 per year on January 1, 2025. Earning thresholds will be updated every three years starting on July 1, 2027. This increase is expected to affect nearly 300,000 currently highly compensated dependent on the relaxed job duties test. Criteria for Classification as an HCE An employee must meet several criteria before being classified as an HCE. First, the employee must be paid a total annual compensation of at least $132,964 as of July 1, which includes at least $844 per week on a salary basis. Effective Jan. 1, 2025, the total compensation threshold will increase to $151,164, which includes at least $1,128 per week paid on a salary basis. The weekly salary amount of $844, or $1,128 as of Jan. 1, 2025, must be paid in its entirety. Employers may not use nondiscretionary bonuses and incentive payments— incl...