Colorado Chiropractors – does the new overtime rule affect your practice?
The U.S. Department of Labor (DOL) announced a final rule that will increase exempt employees’ minimum salaries for executive, administrative, or professional (EAP) employees from federal overtime pay requirements. The new final rule will also automatically update to the EAP salary levels.
Effective July 1, 2024, the annual minimum salary threshold will be $43,888 ($844/week). As of January 1, 2025, the annual threshold will increase to $58,656 ($1,128/week). Beginning July 1, 2027, the department will also automatically increase the overtime threshold every three years.
The Fair Labor Standards Act (FLSA) provides an exemption from both minimum wage and overtime pay for employees employed as bona fide EAP employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than the salary minimum threshold.
In preparation for the upcoming change, employers will need to determine if they raise employees’ salaries to meet or exceed the new salary threshold to remain exempt or reclassify employees as nonexempt. Reclassifying may bring about financial or administrative burdens such as budgeting for overtime if these employees are regularly working more than 40 hours per week and training these employees in the ways of nonexempt such as the need to log their time, take lunches and breaks, and observe overtime policies.
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