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On November 15, 2024, the U.S. District Court for the Eastern District of Texas overturned the Department of Labor’s (DOL) final rule to raise the salary threshold for overtime exemptions, reverting it to pre-July 2024 levels.
Background
The Fair Labor Standards Act (FLSA) white-collar exemptions cover executive, administrative, professional (EAP), and certain sales and computer roles. Highly compensated employees (HCEs) may also qualify. To be exempt, they must meet a specific salary threshold.
2024 Final Rule
On April 23, 2024, the DOL announced a rule change for FLSA overtime exemptions, raising the salary threshold for white-collar workers. The final rule increased the standard salary level, starting July 1, 2024, from:
- $684 to $844 per week ($35,568 to $43,888 per year) for EAPs; and
- $107,432 to $132,964 per year for HCEs.
On January 1, 2025, the standard salary level was set to increase again from:
- $844 to $1,128 per week ($43,888 to $58,656 per year) for EAPs; and
- $132,964 to $151,164 per year for HCEs.
The rule also allowed the DOL to update salary levels automatically every three years starting July 1, 2027.
Court Case and Impact
The District Court ruled that the DOL overstepped by raising the standard salary level too high and allowing automatic adjustments every three years. The court nullified the recent and upcoming salary increases, setting the standard salary level for EAPs at $35,568 and for HCEs at $107,432. Employees who lost their exempt status may now qualify again. The DOL might appeal, but the new administration may not pursue it. Employers should monitor the situation for updates. Download the bulletin for more details.
National Insurance Services is not a law firm and no opinion, suggestion, or recommendation of the firm or its employees shall constitute legal advice. Readers are advised to consult with their own attorney for a determination of their legal rights, responsibilities and liabilities, including the interpretation of any statute or regulation, or its application to the readers’ business activities.
