A judge in a federal district court in Texas has vacated the U.S. Department's final rule that increases the salary basis.
District Judge Sean D. Jordan of the Eastern District of Texas recently vacated the U.S. Department of Labor's (DOL) final rule that increases the salary basis for the "white collar" overtime exemptions under the Fair Labor Standards Act (FLSA). These executive, professional, administrative and highly compensated position exemptions are exempt from overtime payment under the FLSA only if they meet certain requirements. One of the requirements is a salary basis test. The prior DOL rule increased the salary basis test on July 1, 2024 from $684 per week ($35,568 annually) to $844 per week ($43,888 annually). This rule also increased the minimum salary threshold for the HCE exemption from $107,432 to $132,964 annually, and would have allowed for automatic increase every three years. They were scheduled for a second increase on January 1, 2025. The court declared the DOL overstepped its rule making authority. This decision vacates the entire rule, and retroactively applies to the increases previously enacted in July.
While this decision may face appeal, whether an appeal will be maintained will depend upon the incoming administration's decision once in the White House. Employers must now decide whether to maintain the increases they may have provided to employees under the prior DOL. This may cause certain employee relation issues and employers should always look to state laws to confirm that there are no state laws governing this issue.
We encourage clients to contact us to discuss how this issue will impact their workplace and how to respond to these ongoing legal changes in the laws.
Please contact Maureen Pomeroy at Pomeroy Law P.C. 978-358-7550 if you have any questions.
