FLSA Salary Rule Struck Down
A Texas District Court in State of Texas v. U.S. Dep’t of Labor, struck down the U.S. Department of Labor (DOL) 2024 Final Overtime Rule, which revised the minimum salary requirement for the executive, administrative, and professional overtime exemptions (EAP Exemptions) and the highly compensated employee exemption (HCE Exemption) under the Fair Labor Standards Act (FLSA).
As summarized in last week’s article, the 2024 Final Overtime Rule, which took effect July 1, increased the minimum salary from $684 per week ($35,568 per year) to $844 per week ($43,888 per year), and included another automatic increase, effective January 1, 2025, which would have raised the minimum salary to $1,128 per week ($58,656 per year). The Final Overtime Rule also increased the minimum total annual compensation level for the HCE Exemption from $107,432 to $132,964 effective July 1, 2024 and to $151,164 effective January 1, 2025. The increase in January 2025 would have resulted in an approximately 60.6% increase for the EAP Exemption and an approximately 28.9% increase compared to the 2019 minimum salary.
In State of Texas v. U.S. Dep’t of Labor, following a narrow preliminary injunction issued by the District Court in June 2024, the State of Texas and several private-sector business organizations successfully challenged the Final Overtime Rule on a nationwide basis. Ultimately, on November 15, 2024, the District Court found that the minimum salary changes in the Final Overtime Rule exceeded the DOL’s statutory authority, and, therefore, vacated the rule in its entirety.
In other words, the District Court’s ruling invalidated both the January 2025 increase as well as the July 2024 increase that already went into effect. As such, the minimum salary for the EAP Exemption and HCE Exemption will return to $35,568 and $107,432, respectively. This ruling affords relief for employers who were facing drastically increased payroll costs and administrative burdens in implementing the Final Overtime Rule. While it is unclear whether the DOL will appeal, the DOL under the new Trump administration would be expected to abandon any such an appeal. Therefore, it is unlikely that the minimum salary increases in the Final Overtime Rule will return in the near future.
Our Maynard Nexsen team stands ready to assist employers in evaluating the impact of the Texas District Court’s ruling, and otherwise providing guidance on all wage-and-hour issues you may face. Please contact us for additional information or guidance.
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