On November 15, 2024, a federal judge in the Eastern District of Texas blocked the Department of Labor’s (“DOL”) newly issued salary rules for exempt status under the Fair Labor Standards Act (“FLSA”).
The new rules, which took effect July 1, 2024, increased the minimum salary threshold required in order to qualify for overtime-exempt status, thereby increasing the number of employees who are eligible for overtime. The Court’s action on November 15 enjoins, or stops, the DOL rule change nationwide.
Consequently, the salary thresholds for exempt status under the FLSA return to the levels in effect as of June 30, 2024: $684 per week executive, administrative, and professional (“EAP”) employees or $107,432 per year for the highly compensated employees (“HCE”).
What Were the DOL’s 2024 Salary Rules?
The DOL’s 2024 salary rules increased the “standard salary level” minimum for exempt EAP employees from $684 per week ($35,568 per year) to $884 per week ($43,888 per year), effective July 1, 2024. On January 1, 2025, the standard salary level minimum will be set to increase again to $1,128 per week ($58,656 per year).
The 2024 salary rules also increased the minimum “total annual compensation” for employees exempt under the HCE exemption from $107,432 per year to $132,964 per year effective July 1, 2024 and to $151,164 per year on January 1, 2025.
The new rule also included an automatic indexing mechanism that would increase the minimum salary levels in the future.
In sum, under the new rules, employers would have to pay higher salaries to employees in order to avoid paying those employees overtime.
November 15, 2024 Eastern District TX Decision
Shortly after the DOL finalized the new rules, various business groups as well as the State of Texas sued, arguing that the new rule exceeded the DOL’s authority.
In its November 15 decision, the Eastern District of Texas agreed, holding that the 2024 salary rule was an unlawful exercise of the DOL’s authority because the salary threshold was set so high and would increase so frequently that the test for exemption would turn on salary only, and not account for an employee’s job duties. As the Court stated of the EAP exemptions, citing the U.S. Supreme Court, “Congress elected to exempt employees based on the capacity in which they are employed. It’s their duties and not their dollars that really matter.” (Emphasis added.)
Accordingly, the court nullified the 2024 salary rules.
The court’s ruling returns the salary thresholds for FLSA exemptions to the levels effective on June 30, 2024:
| EAP Standard Salary Level | HCE Total Annual Compensation |
| $684 per week ($35,568 per year) | $107,432 per year; including at least $684 per week |
It is possible that the DOL appeals the decision to the Fifth Circuit Court of Appeals. However, given the upcoming changes in the Executive Branch with the incoming Trump administration, DOL may elect not to do so. Further, even if the DOL appealed the decision to the Fifth Circuit, it is likely that the Fifth Circuit would uphold the decision given the Fifth Court’s composition and conservative predisposition. Thus, for the foreseeable future, the salary thresholds in effect on June 30, 2024 will likely remain in effect and control employee eligibility for overtime.
What Does This Mean For Your Agency
Given that changes to employee compensation may be warranted at your agency, you should consult with legal counsel and your agency’s labor relations team to consider FLSA overtime implications. LCW attorneys will continue to closely monitor developments in this area of the law and will provide updates as needed.
The case is State of Texas, Plano Chamber of Commerce, et al. v. United States Department of Labor, et al. (E.D. TX) Civil Case No. 4:24-CV-499-SDJ, November 15, 2024.
Liebert Cassidy Whitmore attorneys are closely monitoring developments in relation to this Special Bulletin and are able to advise on the impact this could have on your organization. If you have any questions about this issue, please contact our Los Angeles, San Francisco, Fresno, San Diego, or Sacramento office.