On November 14, 2024, the U.S. District Court for the Eastern District of Texas entered a nationwide injunction blocking the Department of Labor’s regulation that would have increased the salary threshold for “white collar” exemptions to overtime requirements under the Fair Labor Standards Act. The Court had previously entered a temporary injunction barring the rule only as to the plaintiff in the case, the State of Texas as an employer. Now, this final ruling replaces the earlier temporary injunction and blocks enforcement of the increase as to all employers nationwide. While the DOL can appeal the ruling, given the upcoming change in U.S. presidential administrations, an appeal is unlikely.
In April 2024, the DOL enacted regulations increasing the salary threshold for determining whether an employee is exempt from overtime requirements. The regulation imposed a July 1, 2024, increase of the salary threshold from $35,558 per year to $43,888 per year and an additional increase to $58,656 that would have taken effect on January 1, 2025. The Court ruling invalidates both increases. As a result, employees who satisfy the duties tests for the various white collar exemptions now, again, must earn $35,558 per year to be exempt from overtime requirements. Employers may still want to consult counsel before reversing course on any changes already implemented in connection with the July 1 increase.
Pursuant to the Court’s ruling, the DOL exceeded its authority when it attempted to increase the salary threshold by so much that it essentially converted the FLSA’s duties test into a “salary only” test for determining the exemption. The Court also ruled that the DOL exceeded its authority in implementing an automatic “escalator” provision, which would have automatically increased the salary threshold every three years, and struck down this regulation as well.
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