It’s the start of July and the new Fair Labor Standards Act (FLSA) salary threshold; the law regarding if a position should be salaried or hourly is in full force. The salary threshold has increased to $844/week ($43,888 annually) effective July 1, 2024. We’ve received inquiries from employers, asking “Can I wait it out? There seems to be some legal action to block the next increase on January 1, 2025.” While I’m not an attorney and don’t give legal advice, I wouldn’t advise waiting it out. This article lays it out the new law very clearly https://www.dol.gov/newsroom/releases/whd/whd20240423-0 and while there is some legal occurrences regarding the increased January 1, 2025 salary threshold increase, July 1st is here.
Employers should implement the Fair Labor Standards Act (FLSA) now rather than waiting. The FLSA establishes important standards regarding minimum wage, overtime pay, recordkeeping, and employment in the United States. Here are a few reasons why employers should not delay:
- Legal Compliance: The FLSA sets forth federal labor laws that employers must adhere to. Employers must use an FLSA test to determine if a position is hourly or salary. Everyone in that specific job/position must be paid the same – meaning the position is either hourly or salaried per the test, not the person’s abilities and/or preference. Delaying implementation could lead to legal risks and potential penalties for non-compliance.
- Employee Rights: FLSA protections ensure that employees are fairly compensated for their work, including receiving at least the minimum wage and proper overtime pay. Implementing these standards promptly shows a commitment to respecting employee rights. Employers may be reluctant to move a position from a salaried position to an hourly position due to optics, but it is the right path forward for the employee and the employer. Failing to do so may convey to the employee that the employer isn’t interested in complying with the law, including the overtime which is due to them.
- Operational Efficiency: Adhering to FLSA guidelines can lead to smoother operations, as clear policies on wage and hour regulations can help avoid disputes and grievances among employees. Taking the proper steps now, when the law changes, and making sure a business is in compliance is far easier to convey now instead of having to adjust FLSA position classification later due to trip hazards.
- Reputation and Morale: Following FLSA guidelines can enhance the company’s reputation as a fair employer, which can positively impact employee morale and retention.
- Future Readiness: Implementing FLSA regulations now prepares employers for potential audits or changes in labor laws. It demonstrates proactive management and readiness to adapt to regulatory requirements. While the January 1, 2025 threshold is facing some headwinds, I doubt that some increase to the FLSA salary threshold will go away. The new law proposes an increase every 3 years; meeting the requirements now will prove less strain (financial or otherwise) later.
In summary, implementing the FLSA now ensures legal compliance, protects employee rights, promotes operational efficiency, enhances reputation, and prepares for future regulatory changes. Therefore, employers are generally advised to implement the FLSA law without delay. Not sure where to start? We can help! We work with employers to do FLSA testing, write and communicate FLSA changes to your employees. Reach out to us today! Give us a call at 608-370-4642 or send us an email at angie@milestoneshr.com for a free 30-minute consultation.
