The Fair Labor Standards Act (FLSA) increased minimum exempt salary requirements scheduled for July 1, 2024, and January 1, 2025, have been voided and the minimum salaries for exempt employees have reverted to the previous amounts.
On November 15, 2024, a Texas federal court ruled that the Department of Labor had overstepped its authority when issuing these increases as well as any subsequent automatic increases. As a result of this decision, the federal FLSA minimums will remain $684/week for executive, administrative & professional employees, and $107,432/year for highly compensated employees. It is important to note that this ruling only applies to the Federal minimums and has no impact on any higher state or local minimum salary requirements.
Although employers may choose to return salaries to what they were prior to any increases made to comply with the now eliminated DOL mandated increases, employers need to be mindful that they comply with the higher of the federal, state, or local requirement.
Please contact your HR Representative if you have any questions regarding this announcement at 703-444-0096.
https://apps.trustmineral.com/hr-compliance/law-alerts/UY2YzaeRkJgeIGZLWgQPc/details
Federal: DOL’s 2024 Exempt Salary Rule Thrown Out
On November 15, 2024, a federal court in Texas ruled that the Department of Labor had overstepped its authority with the most recent rule increasing the minimum salary for exempt employees. The July 1 increases are void, the additional increase that would have taken effect on January 1, 2025, won’t happen, and the automatic increases that were scheduled to occur every three years are no more.
In short, the whole rule was thrown out and the minimums have reverted to what they were prior to July 1, 2024. This means that most executive, administrative, and professional employees need to be paid at least $684 per week ($35,568 annually), and not the $844 required by the now-defunct 2024 rule. Employees classified under the highly compensated employee exemption need to be paid at least $107,432 per year, as opposed to $132,964.
Action Items
If so inclined, employers can roll back changes they made to comply with the rule in July and halt any plans they had for the second increase in January. However, they can’t retroactively reduce pay or change an employee’s classification.
Employees should be made aware of any changes to their pay or classification before the changes take effect, and in compliance with any applicable state or local laws, which may have specific notice requirements.
Employers should also consider the potential impacts on employee morale and do what they can to mitigate those that may be negative. If nothing else, explaining that changes are due to fickle federal law and the needs of the business will help employees understand that your decisions aren’t arbitrary.