Effective July 1, 2024, the U.S. Department of Labor (DOL) determined a final rule that increases the minimum salary threshold (known as the Salary Level Test) for Exempt (not eligible for overtime) employees. Under the Fair Labor Standards Act (FLSA), the Salary Level Test is one of three requirements to qualify for an Exempt classification. In addition to the upcoming change, the DOL has set future increases through year 2027:

1. Effective July 1, 2024: The minimum salary for Exempt employees is $3,657.33/Mon ($43,888/Year).  The minimum pay rate for an Exempt RCUH employee (regardless of FTE) will be $3,658.00/month.
2. Effective January 1, 2025: The minimum salary for Exempt employees will increase again to $4,888/Mon ($58,656/Year). 
3. Effective July 1, 2027: The DOL will determine the minimum salary based off data at that time and will require salary thresholds to be updated every three years.

In response to this ruling, the RCUH Exempt Pay Schedule has been updated to ensure compliance with the new regulations. At this time, there are no changes to the Non-Exempt Pay Schedule. Any new recruitments must conform with the updated pay schedule. We have identified and are working directly with Principal Investigators (PIs) regarding impacted Exempt employees. PIs have an option to either:

1. Provide a pay adjustment to meet the minimum salary threshold
2. Convert FLSA status from Exempt to Non-Exempt (eligible for overtime for hours worked in excess of 40 hours per week)

Since the announcement of the final rule in April 2024, lawsuits have been filed against the DOL from organizations and business groups challenging the salary threshold increases. It is important to plan accordingly despite the legal climate. PIs should take this information into consideration while budgeting and planning for current staff and future staffing.

The July 1, 2024 salary threshold impacts a minimal population of current Exempt employees. However, these employees may not meet the new minimum of their applicable pay range. No immediate action is needed from PIs to address the misalignment, since the salary level will increase again in January, unless it is to address pay equity from a newly posted recruitment.

The January 1, 2025 increase is a substantial increase and will have an effect on a larger population of Exempt employees. The RCUH Exempt Pay Schedule will once again be adjusted to ensure compliance to the scheduled increase. We recognize that this is a short window to adjust to the change. RCUH Human Resources is committed to work with PIs to provide solutions and guidance and will continue to assess and determine best practices, while ensuring compliance with applicable Federal and State regulations. For more information, please refer to the DOL Final Rule and Frequently Asked Questions.

If you have any questions, please contact Jennifer Lin at (808) 956-7106 or [email protected].