Pursuant to a new rule issued by the U.S. Department of Labor last week, the DOL has raised the salary threshold for overtime pay. (I wrote about the proposed rule back in September 2023, which you can read about here.) Effective July 1, 2024, an employee must be paid an annual salary of at least $43,888, or $844 a week, in order to meet the Salary Test of the Fair Labor Standards Act overtime exemption. On January 1, 2025, the DOL will raise the salary threshold to $58,656, or $1,128 a week. The last time the salary threshold went up was under the Trump Administration in 2019, when it was increased to $684 a week.
Why Does the Fact that the DOL Raised the Salary Threshold Matter for South Carolina Employees?
Most South Carolina employees are covered by the Fair Labor Standards Act (FLSA), which is the federal law that requires companies to pay at least minimum wage (currently $7.25/hour) and to pay overtime (1.5 times the hourly rate) for all hours worked over 40 in a workweek. Most hourly employees are covered by the FLSA’s overtime pay requirement. However, for salaried employees, that requirement may not apply. Sometimes the company claims an exemption from overtime pay, meaning that if the employee meets certain requirements in terms of job duties and salary pay, then the company does not have to pay the overtime premium for all hours worked over 40 in a workweek. So when does that exemption apply?
In order for the exemption to apply, exempt employees must meet two requirements: the Salary Test and the Duties Test. The Duties Test deals with the actual day to day work that the employee performs. The three main exemptions (although there are dozens of other less common exemptions) are the Executive Exemption, the Administrative Exemption, and the Professional Exemption. The Executive Exemption applies to managers who supervise two or more employees and who also have the ability to hire and fire employees. The Administrative Exemption deals with employees who work in an office setting and are given a great deal of autonomy to make decisions of significance without seeking higher approval (like office managers, for instance). The Professional Exemption applies to doctors, lawyers, nurses, accountants, and engineers, among others.
Assuming that the employee meets the Duties Test of an exemption, the company must still pay the employee a sufficient salary in order to meet the second prong: the Salary Test. And that’s where the new rule change from the DOL comes in. Now, beginning on July 1, the company must pay a higher salary to the employee in order to avoid paying the overtime premium. That means that an employee who gets a salary of less than $844 gross pay a week MUST ALSO be paid overtime if the employee works more than 40 hours a week. Oftentimes, a company will pay an employee the lowest salary possible and require the employee to work 50, 60, or even 70+ hours a week for no additional pay. Under the new rule, the company must pay the employee more in salary to require the employee to work all those extra hours for no additional pay.
Takeaways for South Carolina Employees
I would expect that business groups will fight the DOL’s decision that raised the salary threshold, primarily because it increases pay to employees, so I’ll be following those developments to see whether a federal court will issue any type of injunction (court order) putting the increase on hold while the litigation continues.
Until that happens though, South Carolina employees need to be aware of their rights under the new DOL rule. After July 1, if your employer is still classifying you as “salary exempt” from overtime, yet you are making less than $844 a week and being required to work overtime without extra pay, then you may have a claim under the FLSA. The FLSA is a complicated law, and the facts will matter greatly, but for any questions, you can talk with a South Carolina Unpaid Overtime Lawyer (like me!) to discuss your legal options.
Or, if you are already not getting paid the current level of $684 per week under the Salary Test or working the required job duties under the Duties Test, you may already have a claim for unpaid overtime under the FLSA. The law provides for recovery of the unpaid overtime pay (i.e., wage theft), which can be doubled, along with an award of attorney’s fees and costs. Further, if you complain about overtime pay and are terminated because of that complaint, you would have a claim for retaliation as well.
