Many new and/or expanded laws and regulations relating to pay requirements have been adopted over the last year. Here is a look at the trend in minimum wage and minimum salary requirements that will continue into 2025.
Minimum wage
The federal minimum wage has remained $7.25 per hour since 2009. In the meantime, however, many states and local jurisdictions have increased their minimum wages. For example, more than 20 states and 40 local jurisdictions increased their minimum wages effective January 1, 2025. Read our recent Tip of the Week to see more details on those increases.
And, some states and local jurisdictions scheduled their changes for another point during 2025. The table below lists some examples of locations with changes coming during the remainder of 2025.
Minimum salary requirements for overtime exemption
The federal Fair Labor Standards Act allows for exemptions from the federal overtime (and minimum wage) requirements for certain employees who work in administrative, professional and executive jobs (known as "exempt" employees). To be considered "exempt," these employees must generally satisfy three tests:
- Salary-level test: Employers must pay employees a salary of at least a certain amount per week.
- Salary-basis test: With very limited exceptions, the employer must pay employees their full salary in any week they perform work, regardless of the quality or quantity of the work.
- Duties test: The employee's primary duties must meet certain criteria.
The minimum salary required for the exemptions from overtime under federal law was set to increase from $844 per week to $1,128 per week on January 1, 2025. However, on November 15, 2024, a federal judge in Texas blocked the minimum-salary increase from taking effect nationwide. The decision also nullified the minimum-salary increase implemented on July 1, 2024. As such, the federal minimum salary required for the exemptions from overtime reverts to and is $684 per week.
Many states have their own salary and duties tests for determining whether an employee is exempt from overtime under state rules. Generally, if state law is more protective (i.e., requires a higher salary amount or has duties tests that are more difficult to satisfy), then state law should be followed.
With the federal minimum salary threshold reverting to $684 per week, six states have minimum salary requirements for overtime exemption that will exceed the federal level. We’ve captured information on these states in the table below. Check to see if your state’s minimum salary requirements exceed the federal level as of January 1, 2025.
Conclusion
As 2025 progresses, watch for developments in minimum wage and minimum salary requirements closely and review your workplace policies, practices and training to help ensure compliance when changes occur.