July 1st FLSA Compliance
By Kathryn O'Connor, PHR, SHRM-CP, CCP, GRP, Director, Compensation Services
Published June 25, 2024
The Fair Labor Standards Act (FLSA) salary threshold used in the executive, administrative, and professional exemption tests will increase to $844 per week ($43,888 annually) on July 1, 2024.
Employers should be prepared to act, given that the executive, administrative, and professional exemption tests are the three most utilized by Illinois employers.
To be compliant with the updated rule, employees who are classified as exempt under one of these tests must earn $844 per week or more, paid on a salaried basis. This rate of pay must be in effect on or before July 1, 2024.
This salary threshold applies to all exempt employees, regardless of full-time or part-time status. The salary threshold is NOT pro-rated for employees working fewer than 40 hours per week. Consequently, many part-time exempt employees will be out of compliance on July 1, 2024 if their weekly salary falls below $844 per week.
As you prepare your compliance plan, we would like to share a few reminders:
- Don’t forget that Illinois employers must communicate all pay changes in writing, prior to the effective date of the change.
- Now is a great time to ensure exempt employees not only meet the salary threshold, but the FLSA duties tests as well. Use our Field Guide to Employee Classification during your analysis.
- If employee reclassification to non-exempt is a better option for your organization, all exempt workers making less than $844 per week must be reclassified into a non-exempt status on or before July 1, 2024. We’ve prepared a Sample FLSA Reclassification Letter for your use. (HR Source strongly recommends aligning the FLSA reclassification effective date with the beginning of a payroll cycle.)
- The FLSA salary threshold is scheduled to increase once again on January 1, 2025. HR Source will provide additional information as the new year draws closer.
HR Source members with questions can contact us through the HR Hotline Online or at 800-448-4584.