Hello, and welcome to Training with LegalEase. Today, I want to talk about a new rule that impacts your salaried employees.

Now, we touched on this topic a while ago in a segment entitled, Can I Pay Any Employee a Salary? You may recall we answered that question in the negative. No, you cannot pay any employee a salary. Here’s why. Think of it this way. The rule is that all employees are entitled to an hourly wage plus overtime. The exception to the rule is a salary. If you think of it like that, you’ll stay out of trouble. We call these exceptions, white collar exceptions or executive, administrative, and professional exceptions. In any event, when you pay someone a salary, this is an exception to the rule, which means the employee must meet certain requirements under federal law.
Let’s talk about it.

Salaried employees have to perform certain duties. Those duties are, generally speaking, executive, administrative, professional duties. There are more subsets, but those are the broader categories.
We won’t go over the duties in detail here, but the salaried employee must perform executive administrative, and professional duties.

In addition to those duties that the employee must meet, you as the employer must pay the salaried employee at least $844 per week. Now, that’s an increase. That’s the change. That’s the new law. In the past, you had to pay $684. Since July of 2024, if you pay salaried employees lower than $844 a week, then you are not compliant. You have to increase those salaries to $844 a week.
And guess what? In January of 2025, you have to increase it again. You have to increase the salary to $1,128 per week. You have from July to January to meet the final payment under the salary test.
Keep in mind that the salary level is set to increase every three years to stay in line with inflation and the cost of goods and services.

Okay, so let’s wrap up. Can you pay any employee a salary? No. Before you start to pay an employee a salary, you must make sure that employee meets the duties test, meaning he or she is performing certain duties, and the employee must meet the salary test. The required salary was increased to $844 a week and it will increase again in January.

If you have questions about the duties, please give us a call. We can make sure that your employees are properly categorized, as exempt or non-exempt, that they meet the duties test, and that your job descriptions are compliant.

Thank you so much for joining Training with LegalEase.