The U.S. District Court for the Eastern District of Texas has vacated and set aside the Department of Labor’s rule raising the salary threshold for exempt employees under the Fair Labor Standards Act (FLSA). The decision strikes down both the $44K salary threshold that took effect on July 1, 2024, and the $59K salary threshold that was set to take effect on January 1, 2025. The Department of Labor may appeal the ruling, but for now (and likely continuing under the incoming Trump administration), the raised salary thresholds are nullified.
Background
Under the FLSA, employees must meet certain salary and duties requirements (see the duties test for executive, administrative, or professional employees) to be exempt from the FLSA’s overtime pay requirements. Employees may also qualify as exempt if they meet the salary threshold for highly compensated employees and the related duties test. If an employee does not qualify as exempt, the employee must be paid time and a half for any hours worked over 40 hours in a workweek.
In April 2024, the Department of Labor (DOL) finalized a rule to increase the salary threshold for exempt workers in two stages:
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