The New Jersey Employment Law Firm Blog
Overtime laws guarantee that workers receive additional pay for working more than forty hours in a week. Both federal and New Jersey employment laws contain provisions dealing with overtime compensation. The federal Fair Labor Standards Act (FLSA) includes an exemption from the overtime rules for people who work in “a bona fide executive, administrative, or professional capacity.” Also known as the EAP exemption, it covers a wide range of people in management and other specialized roles. The U.S. Department of Labor (DOL) recently published a new rule that revises the EAP exemption. It took effect on July 1, 2024, and expands eligibility for overtime pay to include many people who had previously been exempt.
Section 7 of the FLSA states that employees are entitled to time-and-a-half for hours worked above forty per week. Section 13 covers exemptions from this and other requirements, with the EAP exemption first on the list. The statute does not provide definitions of the terms “executive,” “administrative,” or “professional.” The DOL took on that task in its regulations. It discusses the EAP exemption in 29 C.F.R. Part 541.
The EAP exemption has three main requirements:
– The employee is paid on a salary or fee basis, not hourly.
– Their salary is equal to or greater than a threshold amount set by the regulations.
– Their job duties meet Part 541’s definitions of “executive,” administrative,” or “professional.”
The threshold amount for all three roles, prior to July 1, 2024, was $684 per week. This amount, which is equal to $35,568 per year, has remained the same for many years. The new rule finally updates it.
The purpose of the EAP exemption is to limit overtime protection to workers who are most at risk of exploitation by their employers. The exemption was supposed to cover workers with relatively high salaries. The pre-July 2024 threshold of $684 per week no longer meets the cost of living in many parts of the country. People who might be barely scraping by in administrative roles could be considered exempt from overtime.
The new rule increases the threshold salary amount as of July 1 and sets dates for further updates.
– On July 1, 2024, the threshold became $844 per week or $43,888 per year.
– On January 1, 2025, it will increase to $1,128 per week or $58,656 per year.
– On January 1, 2027, it will increase based on data available at that time.
– The DOL will increase the threshold again on January 1, 2030, and every three years after that.
This expands the availability of overtime pay and limits the EAP exemption’s extent. It also eliminates the need for the DOL to go through the complete rulemaking process every time it needs to update the threshold amount. Regular updates will be automatic starting in 2027.
In 2020, the DOL created a new category of “highly compensated employees” (HCEs) that it also included in the EAP exemption. This applies to employees who perform at least some of the functions in the DOL’s definitions of “executive,” “professional,” or “administrative,” and whose total annual compensation is above a higher threshold. Before July 1, this amount was $107,432. It will increase on the same schedule as the EAP threshold under the new rule.
If your employer has violated your rights by engaging in unlawful workplace practices in New Jersey or New York, you need an experienced employment lawyer to help you protect your rights. Schedule a confidential consultation to discuss your case with the Resnick Law Group today through our website or by calling 973-781-1204 or 646-867-7997.