On April 23, 2024, the U.S. Department of Labor announced its Final Rule related to overtime exemptions, including its increase of the minimum salary threshold for employees to qualify for the duties test exemption.
In its announcement, the USDOL stated that it was “updating and revising the regulations issued under the Fair Labor Standards Act implementing the exemptions from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees.”
This is what we commonly refer to as the job duties, white collar, or executive/administrative/professional (EAP) exemption. The Final Rule increases the minimum salary thresholds for both standard and highly compensated employees and adopts a new updating mechanism that will adjust the minimum salaries every three years.
Maine has its own salary basis test for this exemption, which for many years has exceeded the federal minimum salary. However, Maine’s rate falls below the new federal rate established in the Final Rule, triggering application of the more favorable federal rate. For this reason, on May 10 the Maine Department of Labor announced that it will enforce the new federal minimum, leading to the following enforcement schedule:
- Until July 1, 2024 - Maine’s current minimum salary: minimum wage ($14.15) x 3000 hours = $42,450.20 per year/$816.35 per week.
- Effective July 1, 2024, a new federal minimum salary of $43,888 per year/$844 per week.
- Effective January 1, 2025, a new federal minimum salary of $58,656 per year/$1,128 per week.
- As the federal minimum is adjusted every three years, MeDOL will enforce the adjusted minimum salary.
This spring, the Maine legislature passed LD 513, which would have increased Maine’s minimum salary above the new federal level. However, that bill did not make it to the governor’s desk before adjournment last week, so it is doubtful it will become law.
Employees not subject to Maine’s wage payment laws, but subject to the federal minimums, are also governed by minimums for “highly compensated” employees. Because of their higher salaries, these employees are governed by a more relaxed version of the job duties test: they are exempt if they “customarily and regularly perform any one or more of the exempt duties or responsibilities of an executive, administrative or professional employee.” The new minimums for highly compensated employees under the Final Rule are as follows:
- Currently - $107,432 per year
- Effective July 1, 2024 - $132,964
- Effective January 1, 2025 - $151,164
- Those minimums set on and after July 1, 2027
However, Maine law does not have a “highly compensated” category for exempt employees. MeDOL has stated that it will not enforce the new federal salary threshold because it is less protective of employees than the traditional job duties test discussed above.
Finally, we note that one or more court challenges to the Final Rule are expected (although we have not been able to find any such lawsuits as of the date of this alert). Employers should not assume that a challenge will occur, nor that if one does it will be successful. They should, therefore, expect to have to comply with the new minimums as of July 1. Now is the time to identify all employees classified as exempt whose compensation may fall below the new minimums, and to develop a plan to bring their compensation into compliance.
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