FAIR LABOR STANDARDS ACT

The Department of Labor (DOL) issued new regulations on April 23, 2024 regarding changes to the salary thresholds that impact overtime rules. The first of these changes to the salary threshold will go into effect July 1, 2024.  

Background

The Fair Labor Standards Act (FLSA) is a federal law, passed in 1938, that establishes certain labor related standards (including overtime pay, record keeping, and minimum wage) for employees in the private sector and in Federal, State, and local governments. The DOL issues and enforces FLSA regulations. Employees are either exempt or non-exempt under the Act. Non-exempt employees are eligible to receive the statutory minimum wage and time-and-one-half overtime pay for hours worked in excess of 40 in any defined work week. Exempt employees do not earn overtime pay.  An employee is classified as exempt under what are referred to as the white collar exemptions only if the employee meets each of the following tests:

  • Salary Level Test – the employee makes above a certain salary level. This is currently $684 weekly ( $35,568 annually). Effective July 1, 2024, this will increase to $844 per week ($43,888 annually) and effective January 1, 2025 will increase to $1,128 per week ($58,656 annually). 
  • Salary Basis Test – the employee must be paid on a salary basis that is not subject to reduction based on the quality or quantity of work, rather than, for example, on an hourly basis.
  • Duties Test – duties consist of certain executive, administrative or professional functions.

Exceptions to the salary level test are provided for employees who fall into specific categories – primarily teachers, doctors, lawyers, and outside sales. Those categories of employees do not need to meet the salary level.

As noted, exempt employees are not eligible to earn overtime under the FLSA. Some of MSU's collective bargaining agreements, however, do provide the ability to earn overtime for certain employees covered by the agreement. These employees include:

  • APA levels 11 and below
  • APSA levels 11 and below
  • Non-Union employees levels 11 and below whose conditions of employment follow the APA/APSA contract

For additional information, please refer to the collective bargaining agreements, the current overtime and time tracking chart, or the July 1, 2024 overtime and time tracking chart.