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The DOL's Final Rule for Overtime Salary Threshold is Dead in the Water
Employers can now breathe a sigh of relief. The U.S. District Court for the Eastern District of Texas has struck down nationwide the Department of Labor's (DOL) Final Rule for raising the minimum salary threshold for employees exempt from overtime pay, also known as "white collar overtime exemption" or "EAP exemption."
What Happened?
The Texas court held that the DOL overstepped its authority to increase the salary threshold under the Fair Labor Standards Act (FLSA). The court held that the Final Rule eliminated consideration of the “duties test” allowing for millions of employees performing exempt duties to be rendered nonexempt merely because of the salary threshold. 
Now What?
The January 1st, 2025 salary threshold increase will no longer go into effect, and the July 1st, 2024 salary threshold increase from $684 to $844 is now void. Accordingly, the minimum salary threshold for exempt workers reverts to $684/week ($35,568/year). The proposed automatic threshold increases every three years are void as well. Employers who complied with the July 1st, 2024 increase should seek legal advice before considering whether to roll back those changes moving forward, as rolling back the increase could have a detrimental effect on employee morale. Some states have salary thresholds higher than the FLSA's threshold, so employers need to be aware if they are affected before implementing changes. Although the DOL may appeal to the Fifth Circuit Court of Appeals, its chance of success is unlikely. Furthermore, it is unlikely that the incoming Trump administration would make any changes to the salary threshold.
This ruling also serves as a reminder to annually review employees’ compensation as well as job duties for compliance with the FLSA and state laws. If duties change, an employee’s FLSA classification will need to be modified. Contact your McBrayer attorney today for assistance with employee audits or any concerns with the now invalidated Final Rule.
Cynthia L. Effinger, Member with McBrayer, is located in the firm’s Louisville office. Ms. Effinger’s practice is concentrated in the areas of employment law and commercial litigation. Her employment law practice is focused on drafting employment manuals and policies, social media, wage and hour, non-compete agreements and workplace discrimination. Ms. Effinger can be reached at ceffinger@mcbrayerfirm.com or (502) 327-5400, ext. 2316.
This article does not constitute legal advice.
