The U.S. Department of Labor’s (DOL) Fair Labor Standards Act (FLSA) final rule, which significantly increased the annual salary level thresholds for exempt employees, and was expected to extend overtime coverage to approximately 4 million additional workers, has been vacated effective November 15, 2024.
On November 15, a federal judge in Texas issued a decision invalidating the DOL’s final rule, which would have raised the salary threshold in two phases (effective July 2024 and January 2025) from $35,568 annually to $58,656 annually. As such, both phases of the salary threshold increases are no longer in effect. In addition, the automatic updates to the minimum salary threshold that were set to occur every three years under the DOL’s rule are no longer effective.
What does this mean for employers? With this decision, which found that the DOL exceeded its statutory authority, the salary threshold established in the 2019 FLSA regulations ($35,568 per year or $683 per week) goes back into effect. Employers should adhere to this salary threshold when evaluating an employee’s exempt classification.
We will continue to monitor this final rule as the DOL may appeal this decision. Accordingly, we recommend reviewing employee classifications and carefully considering any potential changes to compensation plans or employees’ exemption status.
For more information, contact the Davis, Agnor, Rapaport & Skalny attorney with whom you typically work, or one in our Labor & Employment Practice Group.
