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On November 15, 2024, the United States District Court for the Eastern District of Texas vacated and set aside the Department of Labor’s (DOL) final rule establishing new minimum salary thresholds in order to meet the white-collar overtime exemptions from the Fair Labor Standards Act (FLSA).
Previously, on July 1, 2024, the minimum salary threshold in order for executive, administrative, and professional (EAP) employees to be “exempt” was raised from $684 per week ($35,558 per year) to $844 per week ($43,888 per year), and the salary threshold for the highly compensated employee exemption was raised from $107,432 to $132,964 per year. These minimum salary thresholds were scheduled to rise again on January 1, 2025, with the salary threshold for EAP employees rising to $1,128 per week ($58,656 per year) and that for highly compensated employees rising to $151,164 annually. The court determined that the DOL exceeded its statutory authority under the FLSA in implementing the rule.
The court had previously enjoined enforcement of the rule solely for the state of Texas as an employer. However, this time, the court struck down the rule as to all employers nationwide. The court’s ruling entirely vacated the DOL’s rule, which means the initial salary increases that went into effect on July 1, 20204, are now nullified. Accordingly, the salary thresholds will go back to what they were under the DOL’s previous 2019 rule, with the EAP salary threshold of $684 per week ($35,558 annually) and the threshold for highly compensated employees of $107,432 annually. EAP employees must still also meet the respective duties tests in order to be exempt from the FLSA.
This is great news for employers. While the DOL may appeal the decision to the Fifth Circuit; it may decide not to do so with the new incoming administration.
Heather Kramer is a labor and employment attorney with over 20 years of experience.
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