Big ‘I’ Primer Explains Basics of New Overtime Rule – IA Magazine

If you run an independent insurance agency, the words “new overtime rule” probably make your eye
twitch a little. Between shifting salary thresholds, duties tests, and headline-grabbing court
cases, it can feel like the Department of Labor (DOL) is playing salary Jenga with your org chart.

That’s exactly why the Big “I” (Independent Insurance Agents & Brokers of America) put out its
overtime primer: to break the rule down in practical, agency-friendly language and help members
figure out who’s exempt, who’s not, and what to do next. While the legal landscape has shifted
since the rule was finalized, the core concepts the primer explains are still the foundation of
overtime compliance under the Fair Labor Standards Act (FLSA).

In this guide, we’ll translate the Big “I” primer into plain English, walk through the salary and
duties tests, explain what changed with the 2024 overtime rule, and how later court decisions
affected it. Then we’ll zoom in on what all of this means for independent insurance agencies and
other small employers, with real-world examples and experience-based tips at the end.

1. The big picture: how overtime works under the FLSA

At the federal level, overtime starts with one basic idea: most employees must be paid at least
time-and-a-half for all hours worked over 40 in a workweek. That rule comes from the FLSA and
applies to “non-exempt” employees. Exempt employees, by contrast, are not entitled to overtime
as long as they meet specific requirements.

For the white-collar exemptions (executive, administrative, and professionaloften called “EAP”),
the DOL uses a three-part test:

• Salary basis test: The employee is paid a fixed salary, not an hourly wage.
• Salary level test: The salary must be at or above a minimum weekly amount set
  by regulation.
• Duties test: The employee’s primary job duties must meet the definition of an
  executive, administrative, or professional role under the regulations.

Miss any one of those, and your “exempt” employee is probably actually non-exemptand entitled
to overtime pay.

2. What the “new overtime rule” tried to do

In April 2024, the DOL issued a final rule designed to “restore and extend” overtime protections
by updating the salary thresholds for white-collar exemptions. The rule didn’t change the duties
tests, but it significantly bumped the dollar amounts attached to them and added automatic
updates going forward.

Here’s what the rule did on paper:

• Increased the standard salary level required for most EAP exemptions, replacing
  the long-standing $684 per week (about $35,568 per year).
• Raised the “highly compensated employee” (HCE) threshold, which offers a more
  relaxed duties test for very high-paid workers.
• Set automatic updates every three years, pegged to wage data, so the numbers
  wouldn’t sit still for another decade.

For agencies, the message from the Big “I” was: don’t panicbut do evaluate every salaried
employee who was near the old threshold. Producers, CSRs, account managers, marketing staff,
IT, office managers, and even some executives could potentially be affected depending on how much
they earn and what they actually do all day.

3. The salary thresholds in plain English

The heart of the 2024 overtime rule was the salary level test. Here’s how the numbers stacked up
when the rule was finalized:

3.1 Standard salary level

Before the rule, the standard salary threshold for most white-collar exemptions was:

• $684 per week (about $35,568 per year).

The 2024 rule scheduled two big increases:

• July 1, 2024: Salary level would jump to $844 per week
  (about $43,888 per year).
• January 1, 2025: It would rise again to roughly $1,128 per week
  (about $58,656 per year).

Those numbers matter because an employee paid below the threshold can’t qualify for most white-collar
exemptions no matter how “professional” their job sounds in the job posting.

3.2 Highly compensated employees (HCEs)

The HCE category exists for employees who earn a very high total annual compensation and perform
at least one exempt duty. Before the rule, the HCE threshold was:

• $107,432 per year, including at least the standard salary minimum paid on a salary basis.

The 2024 rule would have increased that bar significantly:

• July 1, 2024: HCE threshold of about $132,964 per year.
• January 1, 2025: HCE threshold of about $151,164 per year.

For many agencies, that meant some high-earning account executives and senior producers could
potentially qualify as HCEs, while mid-level managers just under the line would flip from exempt
to non-exempt unless their pay increased.

4. Salary isn’t everything: the duties tests still rule

One of the most important reminders in the Big “I” primer is that you can’t “buy” exempt status
just by paying someone a higher salary. The duties tests never went away.

In simplified terms:

• Executive exemption: The employee manages the enterprise (or a department),
  regularly directs at least two full-time employees, and has genuine authority over hiring, firing,
  or major personnel decisions.
• Administrative exemption: The employee performs office or non-manual work related
  to management or general business operations and exercises discretion and independent judgment on
  significant matters.
• Professional exemption: The employee’s work requires advanced knowledge in a
  field of science or learning, usually earned through specialized education (think lawyers,
  accountants, certain analystsnot every “professional-sounding” job title qualifies).

A salaried CSR whose job is to follow scripts, process routine changes, and escalate anything
tricky up the chain is unlikely to meet the administrative exemptioneven if they’re paid above
the salary threshold. On the other hand, a senior operations manager who designs workflows,
develops policy, and advises ownership on strategy might qualify if their pay and duties align.

5. What this means for independent insurance agencies

One misconception the Big “I” has worked hard to dispel is the idea that independent insurance
agencies are somehow “special” and exempt from federal overtime rules. There is no blanket
exemption just because you sell insurance or operate as an agency.

In reality, most agencies are covered employers under the FLSA based on either:

• Enterprise coverage: The business meets a minimum volume of annual sales and
  engages in interstate commerce (which most agencies do through carriers, customers, and electronic
  transactions).
• Individual coverage: Employees regularly handle interstate communications,
  out-of-state policies, or other cross-border work.

That means every member agency needs to treat overtime compliance as a real, ongoing operational
issuenot a “nice to have.” The Big “I” primer urges agencies to:

• Review each position, not just each person. Two employees with the same title
  might have very different duties in practice.
• Map current salaries against the thresholds. Spot anyone near the line and ask
  whether they truly meet an exemption.
• Document the analysis. If you believe someone is exempt, keep a file with their
  job description, salary, and rationale based on the duties test.

This may not be anyone’s favorite Friday afternoon project, but treating it as a one-time cleanup
and then a periodic check-in can avoid expensive surprise audits and wage claims later.

6. The plot twist: what happened after the rule was finalized

If the story ended with “everyone adjusted and lived happily ever after,” HR blogs would be a lot
shorter. Instead, the 2024 overtime rule quickly became the target of multiple lawsuits, especially
in federal courts in Texasan echo of earlier battles over prior overtime rules.

Several key developments followed:

• Challenges filed by states and business groups argued that the DOL overstepped
  its authority by emphasizing salary level over job duties.
• Federal judges in Texas issued decisions blocking or vacating critical parts of
  the rule, including the higher salary thresholds that were supposed to take full effect at the
  start of 2025.
• As a result, the salary threshold effectively reverted to the pre-rule level
  (the $684 per week standard) while appeals and political responses played out.

For employers, including agencies, that created a strange “hurry up and wait” reality: many
organizations had already adjusted salaries or reclassified employees in anticipation of the new
thresholds, only to discover that the legal floor had snapped back to the older number.

The practical lesson? Even when a new rule is announced with firm dates, litigation can delay,
reshape, or erase it. Agencies need a flexible compliance mindsetone that tracks developments
but doesn’t overreact to every proposal or headline.

7. Practical steps for agencies and small employers

Whether you’re focused on the 2024 rule or just trying to get overtime right in general, the steps
recommended by the Big “I” and many HR and legal experts are surprisingly consistent.

7.1 Build an accurate employee classification map

• Make a master list of roles: producers, CSRs, account managers, marketing,
  finance, IT, admin, leadership, interns, and part-timers.
• Flag each as exempt or non-exempt based on both salary and duties, not just job
  title.
• Note “borderline” roles where duties or pay could change or are close to the
  threshold.

7.2 Decide how to handle borderline employees

For employees who sit near the salary threshold and meet the duties tests, agencies typically
choose between:

• Raising salary to maintain exempt status (if the role truly qualifies and the
  pay fits the market), or
• Reclassifying as non-exempt, tracking hours, and budgeting for overtime when
  workloads spike.

Either approach can work; the key is to be intentional. Leaving someone in limbotreated as exempt
in practice but not meeting the tests on paperis the riskiest option.

7.3 Tighten up timekeeping and remote work practices

The Big “I” primer highlights the reality that overtime risk has grown in the age of laptops,
smartphones, and “just one more email” after dinner. For non-exempt employees:

• Require accurate time records for all hours worked, including remote work and
  brief “check-ins.”
• Set clear expectations about after-hours communication, chats, and email.
• Train managers not to “wink and nod” about unrecorded overtime. If you allow it,
  you generally have to pay for it.

8. Common questions from agency owners

8.1 “Do producers automatically count as exempt?”

Not automatically. Some producers may qualify for an exemption (often administrative or outside
sales) depending on how they’re paid and what they do. Others may be non-exempt, especially if
they’re paid lower salaries plus bonuses and follow highly structured, supervised sales routines.
The analysis is fact-specific.

8.2 “What if my agency is small?”

Being small does not automatically get you off the hook. While there are narrow exemptions for very
small, truly local businesses, most modern agenciesespecially those working with multiple carriers
and cross-state clientsend up being covered in one way or another. It’s safer to assume the FLSA
applies unless a qualified advisor tells you otherwise.

8.3 “If the new rule was blocked, can I just ignore it?”

No. You still have to comply with the current rules, which include salary and duties tests,
even if the precise numbers are different from what the 2024 rule proposed. Also, many state laws
have their own overtime requirements, and states can set thresholds higher than the federal floor.

9. Key takeaways from the Big “I” overtime primer

• The FLSA’s basic overtime promisetime-and-a-half after 40 hours for non-exempt employeeshas not
  changed.
• The 2024 overtime rule focused on raising salary thresholds and
  automatic updates, but later court decisions complicated its rollout and
  restored earlier thresholds in many contexts.
• Agencies are not exempt as a class. Each employee’s status must be analyzed based
  on salary and job duties.
• Good records, clear job descriptions, and thoughtful classification decisions are your best
  defense against overtime disputes.
• The legal environment can change, but the basics of complianceclassify carefully, communicate
  clearly, and document decisionsstay the same.

In other words: the rules might move, but your process doesn’t have to be chaos. Think of the Big
“I” primer as your pocket field guide: not a substitute for legal counsel, but an excellent way to
understand the terrain before you call in reinforcements.

10. Real-world experiences: how agencies are navigating overtime changes

Theory is great, but nothing hits home like seeing how other agencies have handled the same overtime
puzzle. While the details below are composites drawn from common scenarios rather than any single
agency, they reflect the kinds of choices many owners have been making since the new overtime rule
was announcedand then challenged.

10.1 The mid-size agency that chose raises over reclassification

A regional independent agency with about 45 employees discovered that seven long-tenured account
managers were hovering just under the new salary threshold when the 2024 rule was finalized. These
employees already worked with a lot of autonomy, handled complex commercial accounts, and made
judgment calls daily. Their duties clearly leaned into the administrative exemption.

After a financial analysis, leadership decided to:

• Increase each account manager’s salary to a level that would have met the new threshold comfortably.
• Streamline some administrative tasks so those employees focused more on high-level client service
  and less on data entry.
• Update job descriptions to better reflect their actual responsibilities and reinforce the exemption
  analysis.

When courts later disrupted the 2024 rule, the agency could have rolled back those raisesbut chose
not to. The bump helped retention, sharpened role clarity, and made the team feel recognized. The
owner joked that “for once, a government rule we prepared for actually left us in a better place,
even after it changed.”

10.2 The small agency that embraced non-exempt status

A five-person personal lines shop looked at the same rule and made a very different choice. The
agency’s office manager and two CSRs all earned below the new salary threshold and had duties that
were more process-driven than discretionary. Rather than stretch the budget with raises, the owner
reclassified them as non-exempt and started tracking hours more closely.

At first, everyone worried it would feel like micromanagement. But over time, the agency discovered
some unexpected positives:

• Overtime became a clear, visible cost, which nudged the team to improve workflows and staffing
  during peak renewal periods.
• Employees appreciated getting paid extra when they stayed late to handle storm-related claim
  calls or seasonal surges.
• Burnout dropped, because “invisible” extra hours were no longer treated as normal.

When the legal back-and-forth later changed the official thresholds again, the agency didn’t feel
compelled to undo the change. They had found a model that worked culturally and financially, and
they stuck with it.

10.3 Lessons from agencies that waited too long

Not every story has a tidy arc. Some agencies took a “let’s see what happens in court” approach and
made no changes until the last minute. When it looked like the new thresholds might take effect,
they scrambled to review classifications, explain changes to staff, and retrofit timekeeping systems
in a matter of weeks.

The most common pain points in those “crunch time” situations included:

• Confusing, rushed communication that left employees unsure whether changes were about compliance,
  performance, or cost-cutting.
• Inconsistent implementationsome managers let people keep working “off the clock” out of habit,
  while others tried to clamp down overnight.
• Increased legal anxiety when owners realized they had years of spotty time records and fuzzy job
  descriptions to defend if a claim ever arose.

The agencies that eventually got back on solid footing did so by slowing down, bringing in HR or
legal support, and treating the overhaul as a project instead of a fire drill.

10.4 Experience-based tips you can steal today

Based on those experiences, here are a few practical rules of thumb:

• Use new rules as a prompt, not a panic button. You don’t have to change everything
  overnight, but you should use each proposed or final rule as a reason to review your classifications.
• Talk to employees like adults. When you reclassify or adjust pay, explain that it’s
  about compliance and fairness, not demotion or mistrust.
• Invest in one good timekeeping solution. It’s cheaper than guessing how many hours
  someone worked when a dispute arises three years from now.
• Document your reasoning. A simple memo explaining why you believe a role is exempt
  can be a lifesaver later.
• Remember that culture matters. A well-run, compliant agency that respects people’s
  time and effort will have an easier time retaining talentno matter where the salary threshold lands.

At the end of the day, the “new overtime rule” is just one chapter in a long story. The Big “I”
primer helps agencies read that chapter correctly. Your job is to write the next one for your
organization: one where compliance, clarity, and common sense all get some well-earned overtime.