In a 'it's déjà vu all over again' moment, on Nov. 15, 2024, the U.S. District Court for the Eastern District of Texas in Texas and Plano Chamber of Commerce v. United States Department of Labor set aside and vacated the U.S. Department of Labor's 2024 Final Rule increasing the salary level for employees to remain exempt from minimum wage and overtime under the Fair Labor Standards Act's (FLSA) executive, administrative and professional (EAP) exemptions, and automatically updating the salary level every three years. This is, of course, the same fate that met the 2016 Final Rule that both increased the salary level for EAP employees and automatically updated that level, which was enjoined in the waning days of the Obama administration. While the U.S. Department of Justice, which represents the U.S. Department of Labor (DOL), filed an appeal of this decision to the U.S. Court of Appeals for the Fifth Circuit, it is anticipated that the incoming administration likely will withdraw this appeal.
The 2024 Final Rule increased the exempt salary level on July 1, 2024 and January 1, 2025. The first increase for EAP employees was from $684 per week (which equates to $35,568 annually and went into effect in 2019) to $844 per week (which equates to $43,888 annually) effective July 1, 2024. While the State of Texas sought a preliminary injunction of the Final Rule prior to its effective date and was successful, that relief applied to the State of Texas only. Accordingly, many employers increased the salary levels of employees or reclassified employees as non-exempt in advance of the July 1, 2024 deadline.
Under the Final Rule, on Jan. 1, 2025, the salary level for EAP employees was slated to increase from $844 per week (which equates to $43,888 annually) to $1,128 per week (which equates to $58,656 annually). The salary levels then were set to 'automatically' update every three years thereafter.
While the FLSA's statutory text does not provide for any specific minimum salary to be exempt from minimum wage and overtime, the DOL was authorized to 'define and delimit,' among other things, the EAP exemptions. And since the FLSA's enactment in 1938, the DOL has issued regulations providing for a minimum salary level to be exempt from minimum wage and overtime under the EAP exemptions.
Recently, in litigation that challenged the 2019 DOL regulations that had increased the salary level from $455 per week (which equates to $23,660 annually and had been in effect since 2004) to $684 per week (which equates to $35,568 annually), in Mayfield v. DOL, 117 F.4th 611 (5th Cir. 2024), the U.S. Court of Appeals for...
