FLSA salary threshold increase suspended

What Happened?

On November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the U.S. Department of Labor (DOL)’s final regulation which was scheduled to increase the salary threshold for the “white collar” overtime exemption under the Fair Labor Standards Act (FLSA).

The first increase went into effect on July 1, 2024 and the second increase was scheduled for January 1, 2025.

The court determined that the rule exceeded the DOL’s statutory authority and struck it down across the entire country. This decision vacates the requirement for the scheduled salary increases that were set to take effect on January 1, 2025. Additionally, it vacates the previous increase requirement that went into effect in July of 2024.

The DOL may choose to appeal the Texas court’s decision but, under the incoming Trump administration, it seems unlikely that an appeal would be successful so, for now, it’s reasonable assume that the decision will stand.

What does this mean for you?

As an employer, as long as all employees that you have classified as exempt from overtime under the FLSA white collar exemptions are currently being paid at least $684 per week ($35,568 per year) on a salary basis you do not need to adjust their salary as planned.

In addition, if you previously increased any employee’s salary in order to comply with the July 1, 2024, salary threshold increase (which has now been reversed), it is important that you consult with your attorney before making the decision to reduce wages to their prior amount.

As a reminder, the second exemption test requires the employee to meet the duties test for each employee and/or position and that standard remains unchanged.

The Abdo HR Consulting team is available to talk through any questions or concerns as you review the impact on your organization. Reach out to us to start the discussion.