The DOL Overtime Rule’s Impact on Employee Benefits

On April 23, 2024, the U.S. Department of Labor (DOL) final rule increased the salary thresholds used to determine whether executive, administrative, and professional (EAP) employees are exempt from overtime compensation according to federal law. These increased thresholds will likely result in a large number of employees who were once exempt now qualifying for overtime pay. However, employers must also consider how the increased thresholds may indirectly affect their benefit offerings. Techworks is committed to helping employers navigate these changes and maintain the best benefits for their employees while complying with federal and state regulations. 

Techworks Recommends – Consider Reevaluating the Following: 

• How your tech company’s retirement plan defines “compensation” – If an employer’s retirement plan includes overtime pay in its definition of compensation, more employees being eligible for overtime could result in increased retirement plan contributions. In addition, the increase could affect the determination of who is highly compensated for nondiscrimination testing purposes. 
• Whether eligibility for other benefits depends on exempt status – If eligibility for health or other fringe benefits depends on an employee’s exempt status, more workers being classified as nonexempt might mean more employees are eligible to receive these benefits. 

In addition to evaluating existing compensation and worker classification practices, Techworks recommends that employers carefully examine their retirement and health plan documents to determine how the rule may indirectly impact their benefit offerings. While employers may take steps now to prepare for the final rule, they should also continue to monitor legal challenges, as these may impact the applicability of certain provisions of the ruling. A federal U.S. District Court judge in Texas has already forbidden the July 1, 2024 increase from going into effect against state employees in their state, and other cases are currently working their way through the court system. 

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