Texas Court Invalidates DOL Rule, Sending Salary Threshold for Overtime Exempt Employees back to 2019 Levels
By Randall Sutton & David Briggs, Employment Law & Business Litigation Team
As anyone who attended our Annual Employment Law Conference last week will know, the U.S. Department of Labor (DOL) recently mandated a two-step increase in the minimum salary required to qualify for white collar overtime exemptions under the FLSA.
Federal law requires overtime pay for workers unless an exemption applies. The white-collar exemption is the most common way employers avoid overtime obligations for certain managerial, professional, and high-level administrative employees. Under the FLSA, an otherwise exempt white-collar worker must be paid at least the minimum salary in order to avoid any entitlement to overtime.
In 2019, the minimum salary threshold was raised to $684 per week ($35,558 annually). The recent DOL rule raised the exemption to $844 per week ($43,888 annually) effective July 1, with the minimum salary threshold set to increase to $1,128 per week ($58,656 annually) on January 1, 2025. The DOL rule also imposed automatic increases every three years going forward.
The U.S. District Court for the Eastern District of Texas invalidated the DOL regulation, with the decision voiding both the July 1, 2024, and the upcoming January 1, 2025 increase, for all employers nationwide. The court’s decision is not expected to be appealed by the incoming Trump administration. As a result, for the indefinite future, if an employee performs exempt duties under the FLSA and is paid on a salary basis, the employee can qualify for the exemption from overtime so long as the employee’s salary is at least $684 per week ($35,558 annually).
If you have already raised the salary of your exempt employees in compliance with the old rule’s July 1, effective date, you will no longer be required to maintain this level. Of course, it is harder to reduce salaries than raise them, and employers should also be mindful of pay equity rules, which require equal pay for jobs of comparable character unless a bona fide factor applies.
If you have questions about wage and hour law, the white-collar exemptions, pay equity, or anything else employment related, feel free to call our employment law team.
Randall Sutton
rsutton@sglaw.com
Randall Sutton is an attorney in the Employment Law and Civil Litigation groups with 31+ years of experience. Randall Sutton is an experienced litigator who focuses his practice on business and employment litigation matters. Randall also advises employers regarding employment law compliance. With over 30 years of law practice, Randall is highly regarded for his skills as a litigator and is a frequent public speaker on employment law compliance issues.
David Briggs is an attorney in the Employment Law and Civil Litigation groups with 18+ years of experience. David spends much of his day helping clients work through problems. Some clients believe that he is there as much for therapy as legal advice. A typical day could include discussing leave law issues, responding to a BOLI complaint, drafting employment agreements, or litigating a business dispute.
Randall Sutton and David Briggs are both partners in the Employment Law & Litigation practice group.
The information in this article is not intended to provide legal advice. For professional consultation, please contact Saalfeld Griggs PC at (503) 399-1070 or visit www.sglaw.com. © 2024 Saalfeld Griggs PC