On Friday, November 15, 2024, in Texas v U.S. Department of Labor, a federal district court vacated the US Department of Labor’s (DOL) April 2024 final rule that increased the salary thresholds for the executive, professional, and administrative exemptions—commonly referred to as the white collar exemptions—under the Fair Labor Standards Act (“FLSA”). (You can read more about the April 2024 final rule here.)
This means the DOL’s April 2024 final rule is currently unenforceable, and employers will not need to comply with the increased salary thresholds set forth in the rule—including the increase that took effect on July 1, 2024; the increase that would have taken effect on January 1, 2025; and the future automatic increases that were scheduled to take effect every three years based on earnings data.
It is possible that the DOL under the current Biden administration will appeal the decision, but it remains to be seen what steps the incoming Trump administration will take concerning the April 2024 final rule. We will have to wait to see if the DOL under the Trump administration will pursue the appeal or take steps to draft a revised salary threshold, similar to the 2019 rule issued under Trump’s first term after the 2016 rule was struck down.
What does this mean for employers?
For employers who have already increased an employee’s salary to meet the July 1, 2024, increase, it will likely be difficult from a practical perspective to reduce the employee’s salary. Before doing so, an employer should be certain that it is compliant with the FLSA and applicable state and local wage and hour laws, including wage notice and payment laws, as an employee subject to a salary reduction may look to challenge such a decision.
Employers who have not already reviewed their compliance with the FLSA and state and local overtime exemption rules, as well as overall compliance with applicable wage and hour laws, may want to undertake such efforts now with their counsel without the time pressure of looming salary increases.
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