Employers have to comply with both federal and state statutes regarding how they treat workers. Paying employees at least minimum wage and adhering to other wage laws is a crucial organizational obligation. When companies fail to pay workers for their time on the clock or pay them less than minimum wage, frustrated employees may decide to take legal action against the company. Wage claims may relate to payroll and timekeeping practices or may occur due to a difference of opinion about what the situation warrants.
Sometimes, workers take legal action because they believe they should receive overtime wages but have not. Employers may soon be at elevated risk of disputes with workers about overtime pay because a crucial federal rule recently changed.
Exempt salaries recently increased
Many times, the workers entitled to overtime pay are hourly workers. The wages they receive differ from one week to the next based on how many hours they work. Often, workers paid on a salary basis are exempt employees. The company does not have to pay them for overtime even if they put in 50 hours one week.
To prevent potential abuses of exemption rules, the federal government mandates a minimum salary for exempt employees. Companies have to meet or exceed that minimum salary threshold to bypass overtime pay requirements.
For multiple years, that minimum salary remained the same. Any worker who received more than $35,568 annually was exempt from overtime pay rules. That changed as of July 1st, 2024. The minimum salary to exempt an employee from overtime pay rules increased to $43,888 in July.
That minimum salary increases again as of January 1st, 2025. Beginning next year, workers have to earn at least $58,656 annually to be exempt from overtime pay rules. Companies that do not increase worker salaries, offer hourly overtime for non-exempt salaried workers or prevent overtime work could be subject to wage lawsuits.
Remaining up-to-date on changes to key federal laws is important for the financial and legal protection of businesses. Employment litigation can lead to financial setbacks and damage to a company’s reputation. Proactive adherence to all relevant statutes can help companies reduce the risk of litigation and respond more effectively if a worker tries to sue.