On November 15, 2024, the District Court for the Eastern District of Texas invalidated the Department of Labor’s (DOL) 2024 rule increasing salary thresholds for white-collar and highly compensated employee exemptions under the Fair Labor Standards Act (FLSA). This decision reverts the salary basis for these exemptions to pre-July 2024 levels of $35,766 annually ($684 per week).

The now-overturned DOL rule, issued in April 2024, had raised the white-collar exemption salary to $43,888 per year ($844 per week) starting July 1, 2024, with a second phase set to increase it to $58,656 annually ($1,128 per week) on January 1, 2025. The rule also increased the highly compensated employee exemption threshold to $132,964 annually in 2024 and $151,164 in 2025, alongside a provision for automatic salary updates every three years.

The court ruled that the DOL exceeded its authority under the FLSA, which emphasizes employees' duties rather than salary in determining exemption status. By setting high salary thresholds, the court argued that the DOL effectively replaced the duties test with a salary-only standard, contradicting the statute. The court also deemed the automatic increases invalid under regulatory procedures.

Employers nationwide can now revert to the previous salary basis but should note that certain states and localities, including California, New York, Colorado, and Washington, enforce higher salary thresholds. While the DOL could appeal, many expect the current administration to let the decision stand.

Employers with questions on compliance should consult their city attorney, or you may contact OMAG General Counsel Monica Coleman, at mcoleman@omag.org or (405) 657-1422.