On November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated a rule
issued by the Department of Labor (“Rule”) to raise the minimum salary threshold applicable to
white-collar exemptions under the Fair Labor Standards Act (“FLSA”).
The Rule raised the minimum salary threshold from $684 to $844 per week for white-collar
exempt employees (executive, professional, and administrative), effective July 1, 2024. The
Rule was also set to increase the minimum salary threshold again on January 1, 2025, from $844
per week to $1,128 per week. In addition, beginning on July 1, 2027, the minimum salary
threshold would have increased automatically every three years under the 2024 Rule.
The court’s ruling in State of Texas v. U.S. Department of Labor vacates the Rule nationwide,
including the increased salary threshold which many employers began applying over five months
ago. If an employer already modified an employee’s pay or changed an employee’s classification
based on the earlier July 1, 2024, increase, the employer will need to evaluate whether it will
modify that employee’s classification/pay again. Alternatively, employers may decide to
maintain any salary or wage changes previously enacted. Based on the court ruling, employers
will no longer need to prepare for the upcoming salary threshold increase set for January 1, 2025,
and other automatic increases prescribed by the Rule.
In its ruling, the court looked to the U.S. Supreme Court’s lowered standard of deference to an
agency under the recent Loper Bright Enterprises v. Raimondo decision and found that the DOL
exceeded its authority. The court determined the Rule to be improper because it focused on
compensation rather than employee duties. In addition, the court ruled that the automatic three-
year increase was “untethered” to an employee’s job duties and violated the notice-and-comment
requirements under the Administrative Procedure Act.
According to the court, the appropriate remedy was to vacate the Rule nationwide. The ruling
could be appealed. A new approach by the incoming administration may also cause the DOL to
rescind the Rule.
Brendan F. Cassidy is an attorney at Praemia Law, PLLC. This article is for general
informational purposes only and should not be relied upon or regarded as legal advice. Please
contact Brendan Cassidy at brendan.cassidy@praemialaw.com or 703-399-3603 concerning
particular facts and circumstances.
