Federal Court Blocks Department of Labor 2024 Salary Threshold Rule

According to an article by Venable, a federal court recently vacated a Department of Labor (DOL) rule designed to raise the salary thresholds for exempt employees under the Fair Labor Standards Act (FLSA).

The blocked rule, which was to be rolled out in stages beginning July 1, 2024, aims to increase minimum salary thresholds for exempt employees in the executive, administrative, and professional (EAP) categories.

This decision halts planned increases and blocks future automatic adjustments, leaving many employers questioning their next steps.

The FLSA mandates that covered employees receive minimum wage and overtime pay unless they qualify for specific exemptions like the EAP categories. To qualify, employees must pass both a duties test and a salary test.

Certain employees, such as teachers whose primary duty is teaching, tutoring, or instructing at an educational institution, are subject only to the duties test and not the salary test.

The DOL’s 2024 rule proposed three threshold increases: $844 per week in 2024, $1,128 in 2025, and automatic triennial adjustments starting in 2027. The State of Texas and trade associations challenged the rule, arguing it exceeded DOL’s authority.

A preliminary injunction limited the rule’s enforcement to Texas in June 2024, but a November 15, 2024, decision vacated the rule nationwide, finding it an improper exercise of agency power.

The court ruled that the 2024 Department of Labor rule unlawfully emphasized salary thresholds over the duties test, undermining the balance established by Congress. The decision nullified the July 2024 increases, canceled the scheduled 2025 adjustment, and barred future automatic changes.

While the ruling may face appeal, significant shifts in federal administration make immediate legal challenges unlikely.

Law firms advising employers, particularly independent schools, should emphasize compliance with the duties test while re-evaluating classifications. A careful review of day-to-day duties and adherence to state notification laws are critical.

Additionally, this case underscores the importance of accurate time tracking for non-exempt employees to avoid costly FLSA violations.