There is good news for employers this month.
On Friday, Nov. 15, a rule proposed by the U.S. Department of Labor (DOL) to increase the minimum salary threshold for executive, administrative, or professional (EAP) employees to qualify as exempt from the federal Fair Labor Standards Act (FLSA) overtime requirements was invalidated by the U.S. District Court for the Eastern District of Texas.
U.S. District Judge Sean Jordan ruled that “the 2024 Rule exceeds the Department’s authority and is unlawful.” In response to efforts by the Plano (Texas) Chamber of Commerce and the state of Texas, Judge Jordan had previously granted a preliminary injunction days before the rule was set to take effect in July. The final decision vacates and sets aside the rule nationwide.
As the NACC communicated this past April, the DOL had proposed a two-step increase in the salary threshold below which EAP employees would be eligible for overtime. The rule would have raised the minimum salary level to $43,888 annually starting July 1, 2024, and to $58,656 annually starting Jan. 1, 2025. This court decision blocks both increases. As a result, the salary threshold for exempt employees reverts to the limit set by the DOL in 2019: $35,568 annually.
In theory, the DOL could appeal the U.S. District Court decision to the 5th U.S. Circuit Court of Appeals. However, the likelihood of an appeal being filed before the new administration takes office—or whether a new administration would pursue this increase—is unclear.
As always, NACC provides this update for informational purposes only. Nothing in this post should be construed as legal advice. Employers are encouraged to consult their own legal counsel to determine the best course of action following this court decision.