FLSA Salary Threshold Increases Struck Down on Nationwide Basis

To the relief of most employers across the country, on November 15, 2024, the United States District Court for the Eastern District of Texas vacated the United States Department of Labor’s final regulation increasing the salary threshold for the white-collar overtime exemptions under the Fair Labor Standards Act (i.e., executive, administrative, and professional exemptions).  Unlike earlier in the year when the Texas court enjoined enforcement of the regulation against only the State of Texas, this time around the court vacated the entire regulation on a nationwide basis.  As such, employers are not legally required to further raise minimum exempt salaries as of January 1, 2025, as called for by the DOL’s final regulation.

According to the court, the DOL exceeded its authority by raising the salary threshold too high and by including in the regulation an automatic escalation provision to further increase the threshold every three years.  The court held that the new salary threshold created a de facto “salary only” test for the white-collar exemptions thus improperly eliminating the statutorily imposed duties requirements for the exemptions.

Interestingly, the court struck down both the July 1, 2024 increase and the January 1, 2025 increase.  As such, at present, the applicable salary threshold for the FLSA’s white-collar exemptions is $684/week ($35,558/year).  Please note, however, that some states have higher salary thresholds for these overtime exemptions under state law (e.g., Alaska, California, Colorado, Maine, New York, and Washington).  If you have employees in any of these states, you will need to comply with the higher salary thresholds established by state law.

At this point, the DOL’s final regulation appears to be dead in the water.  While it is possible for the DOL to appeal the Texas court’s decision to the United States Court of Appeals for the Fifth Circuit, this seems to be unlikely in light of the upcoming change in presidential administrations.  We will keep you posted of any additional developments in this regard.  For now, employers (and human resource professionals), can take one thing off the year-end “to do” list.

For questions about the foregoing or any other labor and employment law topic, please do not hesitate to contact the attorneys at Hoffman & Hlavac. To stay updated on key labor and employment law developments that affect your workplace, be sure to subscribe to our blog.