Court Nixes Dramatic Increases to Salary Threshold for FLSA Exemptions
Court Nixes Dramatic Increases to Salary Threshold for FLSA Exemptions
By Melissa Menkel McGuire
Welcome to ASHRM’s Government Affairs Updates! As HR professionals, staying informed about the ever-evolving legal landscape is crucial to ensuring compliance and safeguarding your organization. Whether it's national policy shifts or state-specific regulations, we're here to equip you with the insights you need to navigate these changes with confidence.
Many employers have prepared for the substantial increases to the salary thresholds for the so-called “white collar” exemptions under the Fair Labor Standards Act (“FLSA”). On April 23, 2024, the U.S. Department of Labor (“USDOL”) revised its regulations to increase the minimum salary necessary for employees to qualify for executive, administrative, professional and highly compensated exemptions. On November 15, 2024, a federal court in Texas put the brakes on those regulations, ordering a nationwide injunction.
The new USDOL thresholds for exempt executive, administrative and professional exemptions increased from $35,568 per year to $43,888 on July 1, 2024, and were set to rise again to $58,656 on January 1, 2025. That was a $23,088 increase in six months. Similarly, the minimum salary to qualify for the highly compensated employee exemption also dramatically increased from $ 107,732 to $132,964 on July 1, 2024, and was scheduled to increase to $151,164 on January 1, 2025, for a total increase of $43,432. The new rule also automatically imposed additional increases every three years.
The federal court found that the USDOL exceeded its authority to “define and delimit” the exemptions by emphasizing salary, rather than the duties necessary to establish the exemptions. The USDOL itself estimated that millions of workers would lose the exemption under the new salary standards, expanding their entitlement to overtime.
The USDOL may appeal the court’s decision, but when the new Trump administration takes over in January, it may withdraw an appeal. It also seems likely that with a more business-friendly agenda, the new administration may withdraw or amend the regulations.
In the meantime, employers who have implemented or are in the process of implementing changes to address the now-suspended standards should consider both legal and non-legal implications of changing course. Employers should also consider state wage and hour laws, which may impose standards different from those of the FLSA.
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By Melissa Menkel McGuire, Partner at Gordon Feinblatt LLC
Government Affairs, Anne Arundel County SHRM Chapter
This information is intended for informational purposes only and is not legal advice to any person, entity or firm. The material included is obtained from a variety of sources. Portions of the content of this publication may contain Attorney Advertising under the rules of some states. Prior results do not guarantee a similar outcome in the future.
