On November 15, 2024, the U.S. District Court for the Eastern District of Texas struck down the U.S. Department of Labor’s (DOL’s) final rule that was set to raise the minimum salary threshold for “white collar” employees to be exempt under the Fair Labor Standards Act (FLSA). The court’s order applies to employers nationwide.
Under the FLSA, certain “white-collar” workers can be exempt from overtime pay requirements if they are paid on a “salary basis,” make more than a certain amount each year, and work in a “bona fide executive, administrative, or professional capacity.”
The DOL’s rule, which was adopted in April 2024, raised the minimum salary threshold in two phases. The first increase took effect on July 1, 2024, and it raised the minimum salary level from $684 per week to $844 per week (or the equivalent of $35,558 per year to $43,888 per year). The rule was set to further increase the minimum salary level to $1,128 per week (or $58,656 per year) starting on January 1, 2025. But that change will no longer go into effect after the court’s decision to strike the rule.
In its decision, the court reasoned that the DOL exceeded its authority under the Administrative Procedure Act because by almost doubling the minimum salary threshold, the rule “eliminates consideration of whether an employee performs ‘bona fide executive, administrative, or professional capacity’ duties in favor of what amounts to a salary-only test.”
Since the court vacated the rule in its entirety, the court not only blocked the January 1, 2025 increase from going into effect, but also reversed the July 1, 2024 increase. As a result, the minimum salary threshold that was previously in effect before July 1, 2024 will be reinstated. That amount is $684 per week, or $35,558 per year. Employers may want to review their roster of employees for individuals who meet the duties component of the exemption, but who have been treated as non-exempt since July 1, 2024 due to not meeting the minimum weekly salary threshold.
UB Greensfelder’s Employment & Labor Practice will continue to monitor DOL developments.
