CTR recently issued an update noting that on November 15, 2024, a Texas court struck down the U.S. Department of Labor (DOL) regulation which mandated the July 1, 2024 and upcoming January 1, 2025 salary threshold increases for exempt workers under the FLSA regulations.
Not surprisingly, the DOL appealed this ruling on November 26, 2024, arguing that it did, indeed, have the authority to increase the salary thresholds for exempt workers. The DOL’s appeal, while anticipated, is likely to be impacted by the incoming presidential administration and a changeover in leadership at the DOL, which could choose to drop the appeal or take different action on the overtime thresholds.
The DOL could also seek to expedite the appeal, but it is unlikely that the overtime rule’s salary threshold increases will be put back on track by January 1, 2025. For now, the DOL’s 2019 salary thresholds remain in force, with the EAP (executive, administrative, and professional) exemption set at $684 per week ($35,568 per year) and the HCE (highly compensated employees) exemption set at $107,432 per year.
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Previous Blog Post on Federal Court Overturns FLSA Salary Thresholds
Here's what you need to know:
Key Ruling Highlights:
1. The court ruled that the U.S. Department of Labor (DOL) exceeded its authority with new salary thresholds for exempt employees.
2. Effective immediately, the following thresholds are nullified:
• The $844/week threshold implemented on July 1, 2024.
• The $1,128/week threshold scheduled for January 1, 2025, along with all future automatic increases.
3. The previous $684/week threshold is reinstated nationwide.
What This Means for Employers:
• Don’t act hastily. Before adjusting salaries or reclassifying employees, consult with labor and employment counsel.
• State laws still apply. Some states have higher salary thresholds for exempt workers that remain in effect regardless of this ruling.
This decision is likely to be contested further, but for now, compliance requires reverting to the $684/week federal standard unless state-specific laws dictate otherwise.
Stay tuned for updates as this situation develops.
➡️Need help with Compliance? Contact us!
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