DOL RULE INCREASING SALARY THRESHOLD SET ASIDE
November 18, 2024
The U.S. District Court for the Eastern District of Texas has vacated and set aside the U.S. Department of Labor (DOL)’s final rule increasing the salary threshold for the “White Collar” overtime exemptions under the Fair Labor Standards Act (FLSA) on a nationwide basis.
- The court held that each of the three components of the rule exceeded the DOL’s statutory authority under the FLSA. The court had previously enjoined enforcement of the rule against the State of Texas in its capacity as an employer of state employees; its final decision now vacates the rule for all employers nationwide.
- This means, most notably, that the increase in the salary level to be exempt to $1,128.00 per week ($58,656 per year) will NOT go into effect January 1, 2025. The court also struck down the July 1, 2024, increase to $844.00 per week ($43,888 per year). Finally, the court held that the final rule’s automatic “escalator” provision, which would have increased the threshold every three years going forward, was also unlawful.
- As such, the current salary threshold to be exempt under an applicable white-collar exemption is $684.00 per week ($35,568 per year).
What Comes Next?
- The January 1, 2025, increase will not go into effect as scheduled, and as a matter of law, the July 1, 2024, increase is nullified. The salary threshold will revert to $684 per week ($35,568 per year).
- Employers that previously adjusted salaries or the exemption status of employees to meet the July 1 salary level of $844.00 per week ($43,888 per year) may have the opportunity to reduce the salary increase and/or exemption status of affected employees. Clients are advised to consult with SESCO before considering whether to rescind those changes on a going-forward basis.
- The DOL may seek to appeal the lower court’s decision to the Fifth Circuit Court of Appeals. That said, with the upcoming change in the presidential administration, we predict that under new leadership the DOL would likely abandon any appeal and allow the lower court’s decision to stand. Going forward, it is less clear whether the Trump administration will revisit some or all the rule, repealing it entirely, or perhaps adopting a different formulation.
State Salary Thresholds
To ensure compliance, SESCO clients need to be aware of state salary threshold requirements that are higher than the Federal requirement.
The following states have their own salary thresholds that employers need to comply.
- Alaska: twice the state's minimum wage rate for a 40-hour workweek ($938.40 per week as of January 1, 2024).
- California: twice the state's minimum wage rate for a 40-hour workweek ($1,280.00 per week as of January 1, 2024).
- Colorado: changes July 1 of each year ($1,057.69 per week as of July 1, 2024).
- Maine: $844.00 per week as of July 1, 2024; $1,128.00 per week as of January 1, 2025.
- New York: $1,300.00 per week as of March 13, 2024.
- Washington: twice the state's minimum wage rate for a 40-hour workweek ($1,302.40 per week as of January 1, 2024).
If employers have any questions or concerns, we recommend they contact us to ensure compliance. For assistance, contact us at 423-764-4127 or by email at sesco@sescomgt.com
To ensure that you are receiving the most up to date information, please subscribe to SESCO News Blasts.
