DOL Issues Final Overtime Rule

Virginia Department of Human Resource Management - May 2024

May 29, 2024

DOL Issues Final Overtime Rule

Dear HR Professionals, 

As you may be aware, the U.S. Department of Labor (DOL) has issued a Final Overtime Rule, affecting the salary threshold for exemption from overtime pay and for highly compensated employees under the Fair Labor Standards Act (FLSA).

The following summarizes the coming changes:

¹Legal challenges of the Final Overtime Rule may occur. It is highly recommended to plan for the new salary thresholds as described; however, it is best practice to stay informed of all compliance requirements and act accordingly.

To ensure a smooth transition and compliance with the Final Rule, please consider the following:

1. Audit Employees’ FLSA Classifications: Review classification of employees as exempt or non-exempt based on the duties test and new salary threshold. Ensure employees are correctly classified by reviewing Employee Work Profiles (EWP’s) for accuracy and comparing the duties and responsibilities to the Executive, Administrative, and Professional Exemption. Then review the employee’s current salary in relation to the new salary threshold. Be sure to include the impending 3% salary increases effective 6/10/24 in your calculations. Consider partnering with HR colleagues across your agency’s secretariat to ensure consistent job classification across similar jobs. Reminder: meeting the new salary threshold doesn't automatically make an employee exempt from overtime pay. The employee's job duties must also primarily involve executive, administrative or professional duties as defined by the regulations.
2. Assess Financial Impact: Once Exempt/Non-Exempt classification has been confirmed, evaluate financial impact to your agency. Financial impact may include base pay increases for employees to reflect the new threshold ($844/week or $43,888/year), or projected overtime expense for employees that are re-classified as non-exempt, thus entitled to overtime pay for hours worked over 40 in a work week. Further financial impact may include base salary increases due to compression adjustments.  Partner with colleagues in your agency’s finance department so the full financial impact can be considered. Continue to assess beyond the initial requirement scheduled for July 1, 2024. Plan for further adjustments to meet the threshold requirements scheduled for January 1, 2025, and beyond. The final rule includes a three-year automatic adjustment mechanism for updating the salary threshold.
3. Advise Management of Options and Potential Financial Impact: This allows for an informed decision to be made regarding changes to FLSA exemption status or increasing salary rates to the threshold rate for impacted positions.
4. Review and Update Agency Policies and Procedures: Review and update all relevant agency policies and procedures, which may include employee handbooks, salary administration plans and timekeeping procedures.
5. Employee Communication: Provide information about the updated overtime threshold, and changes in processes or procedures in which employees need to be made aware. Communicate directly to employees that may be specifically impacted, which may include changes in classification (exempt to non-exempt or non-exempt to exempt) and/or job duties depending on your audit of the EWP and assessment against the applicable exemption. Consider how a change to non-exempt status could be perceived and tailor your communications and communication strategy accordingly.
6. Training and Education: Conduct training sessions or workshops to educate managers and employees on the revised regulations, ensuring they understand their rights and responsibilities concerning overtime pay. Provide timekeeping procedures training to employees with a change in exemption status.
7. Compliance Monitoring: Regularly monitor relevant labor laws to ensure your agency is compliant. Plan for future changes that impact your agency and include necessary partners such as finance, IT, etc.
8. Consult with DHRM: Seek guidance from your partners in DHRM to discuss compliance questions with federal and state labor laws and regulations.

Please reach out to DHRM (compensation@dhrm.virginia.gov) if you have any questions or need further clarification regarding the updated overtime threshold or its implications for your agency.

Helpful Resources:

• Final Rule:  Restoring and Extending Overtime Protections
• Fact Sheet #17B:  Exemption for Executive Employees Under the FLSA
• Fact Sheet #17C:  Exemption for Administrative Employees Under the FLSA
• Fact Sheet:  #17D:  Exemption for Professional Employees Under the FLSA
• Fact Sheet #17E:  Exemption for Employees in Computer-Related Occupations under the FLSA
• Fact Sheet #17F:  Exemption for Outside Sales Employees Under the FLSA
• DHRM:  Policy 3.05 Compensation

Thank you! 

Published by the Virginia Department of Human Resource Management

www.dhrm.virginia.gov

101 N. 14th Street, 12th Floor
Richmond, VA 23219