Two important changes in employment laws become effective in the next weeks. As of June 30, 2024, hiring by nonprofit organizations with employees in the District of Columbia must meet the requirements of the District of Columbia's updated law on wage transparency, and on July 1, 2024, nonprofit organizations nationwide must pay the increased federal minimum salary to employees classified as exempt under the Fair Labor Standards Act (FLSA). Employers should make sure they have taken any necessary steps to come into compliance.
DC Wage Transparency Requirements
Effective June 30, 2024, the D.C. Wage Transparency Omnibus Amendment Act of 2023 requires that employers with at least one employee working in the District of Columbia update their hiring practices to meet the law's expanded obligations of salary transparency. The existing law protects employees who make inquiries about or discuss wage information. The amended law will add additional protections, prohibiting employers from screening candidates for employment based on their wage history or inquiring about a candidate's wage history. In addition, employers will be required to post a minimum and maximum salary in all advertised job listings and position descriptions based on the employer's good faith belief of the salary range at the time of posting. Employers must also provide candidates with information about the existence of health benefits prior to their first interview for any position. Finally, employers will be required to post a notice about the law's requirements. A sample model notice has not yet been published by the D.C. government, although one is expected.
Increase in Federal Minimum Salary for Exempt Employees
For employees to be classified as exempt from the minimum wage and overtime requirements of the FLSA, in general, they must meet three requirements: they must perform duties that satisfy the tests for being exempt executive, administrative, or professional employees; they must be paid on a salary basis; and they must receive a minimum specified salary. Final regulations recently promulgated by the Department of Labor (DOL) change the last requirement, increasing the minimum salary exempt employees must receive. The regulations do not otherwise change the exempt employee classification requirements.
The current minimum salary for exempt employees is $684 per week, which is the equivalent of $35,568 annually. Effective July 1, 2024, exempt employees must receive a minimum salary of $844 per week, which is the equivalent of $43,888 annually. For employees who are classified as exempt based on the "Highly Compensated Employee" (HCE) test, the total annual compensation level will increase from $107,432 to $132,964.
The final regulations provide for further increases in the minimum salary level going forward. On January 1, 2025, the minimum standard salary level will be increased to $1,128 per week, which is the equivalent of $58,656 annually, and the HCE total annual compensation level will increase to $151,164. Beginning July 1, 2027, and then again every three years thereafter, the minimum salary levels will be automatically increased based on the methodology established in the regulations.
Legal challenges to the new federal regulations have been filed in court, so it is possible implementation of the salary increases will be delayed in whole or in part. However, given the upcoming July 1, 2024 deadline, employers should be prepared to take action to comply with the regulations. Employers should make sure that employees classified as exempt are receiving the increased minimum salary. If not, the salary can be adjusted upward to meet the new required level, or employers can reclassify the employee as non-exempt (and pay them at least the minimum wage and any overtime for work in excess of 40 hours in a regular workweek).
Employers should also remember that they must comply with the requirements for treating employees as exempt under state as well as federal law. Certain states, such as California and New York, require that employees working in those jurisdictions receive a significantly higher minimum salary to be treated as exempt.
Additional information about the DOL regulations can be found here.
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