On November 15, 2024, the U.S. District Court for the Eastern District of Texas entered a nationwide injunction halting a Department of Labor (“DOL“) final rule under the federal Fair Labor Standards Act (“FLSA“), that went into effect on July 1, 2024 (the “Rule”). The district court opinion, Texas v. U.S.D.O.L., No. 4:24-CV-499-SDJ, is available . As a result, a prior DOL rule from 2019 setting a lower salary threshold remains in effect.
The vacated Rule had increased the minimum salary threshold for white-collar or EAP (executive, administrative, and professional) exempt employees under the FLSA. On January 1, 2025, the threshold under the vacated Rule would have increased to $58,656 annually ($1,128 per week) from the Rule’s earlier increase to $43,888 annually ($844 per week), which went into effect on July 1, 2024. The Texas district court’s injunction restores the salary threshold to $35,568 (or $684 per week) effective immediately under the 2019 DOL rule. Some states, however, still require a higher salary threshold for certain exemptions, such as New York.
Many employers have undoubtedly implemented the Rule’s mandates, either by increasing salaries for white-collar exempt workers or reclassifying those employees as nonexempt from overtime.
How Should Employers Respond?
Given the sudden change in regulations and the uncertainty surrounding potential appeals by the DOL, employers are advised to proceed with caution:
- Evaluate Current Classifications: Review employee classifications and compensation plans to ensure compliance with the reinstated 2019 salary threshold and applicable state requirements.
- Communicate Carefully: Changes to employee compensation and reclassifications can significantly impact employee morale. Employers should develop a clear and transparent communication strategy to address potential adjustments and changes.
- Monitor Legal Developments: The DOL may appeal the decision, and future rulings could again alter the overtime landscape. Employers should stay informed about updates to avoid noncompliance.
- Seek Counsel: Balancing compliance with both federal and state overtime laws and regulations/rules can be complex, especially when legal uncertainties are in play. Employers are encouraged to consult with experienced legal counsel to navigate these challenges and mitigate risks.
At Frier Levitt, our team is ready to assist employers in reassessing their workforce strategies, maintaining compliance, and addressing the legal and practical implications of these changes. Contact us for guidance on navigating these developments.
General Counsel
