On November 15, 2024, a Texas federal district court set aside and vacated the U.S. Department of Labor’s final rule that substantially increased the minimum salary threshold for employees who are classified as exempt under the executive, administrative, and professional exemptions. As discussed in a prior alert, the DOL issued the rule in April 2024, and it increased the salary basis for such exemptions from $684/week to $844/week in July 2024, with another increase to $1,128/week scheduled for January 2025, and further automatic index increases beginning in July 2027. The rule also increased the salary level for the highly compensated employee exemption.
As a result of this decision, employers will not need to adjust salaries in January 2025 to comply with the vacated rule, and the minimum salary level will return to the amount in effect prior to the DOL’s final rule – $684/week ($35,568/year) for executive, administrative, and professional exemptions; and $107,432/year for the highly compensated employee exemption.
The court reasoned that the DOL’s new rule exceeded its authority under the FLSA because it effectively displaced the FLSA’s duties test with a predominant salary-level test for a significant percentage of otherwise exempt employees. The DOL has the option to appeal the decision to the 5th Circuit Court of Appeals, but the upcoming change in presidential administrations makes it unlikely that the DOL will seek to revive the rule.
For more information about this decision regarding the salary threshold for exempt employees, please contact Russell Rendall or one of the other employment law attorneys at Weston Hurd LLP.
