Several days ago, a federal district court in Texas put the brakes on the 2024 FLSA rule from the Department of Labor. For those that don’t remember, we blogged about that rule here. If a Texas judge issuing a nationwide injunction against a DOL rule sounds familiar, seven years ago, a Texas court did practically the same thing.
The 2024 rule provided for the two-phased minimum salary increases regarding the executive, administrative, and professional exemptions. Before the 2024 rule, the minimum salary requirement was $684/week ($35,568 annually). The first increase of $844/week ($43,888 annually) went into effect on July 1, 2024, with the second increase to $1,128/week ($58,656 annually) due to go into effect on January 1, 2025. The Texas court ultimately found that the DOL exceeded its authority by increasing the salary floor to such a marked degree that the “duties test” was now just a salary test.
What does all of this mean? The court’s order vacates the rule nationwide. Vacating the rule means that the increase that went into effect in July is also vacated; therefore, we have returned to the pre-2024 rule, where the salary threshold for these exemptions is $684 a week or $35,568 annually.
The Department of Labor can theoretically appeal this decision, and that appeal could be filed before the Trump administration takes office. However, the Trump administration would be under no obligation to continue to push for the Biden administration increase. It seems unlikely that the Trump administration will defend the salary increase. If that prediction--much like our Husker predictions--turns out to be incorrect, we will provide an update.
If you increased salaries for your FLSA-exempt staff in July and/or were planning on it in January, at least for now those rules are no longer in effect. There’s no legal obligation to raise salaries to meet those new thresholds in order to remain exempt under the FLSA. Additionally, any salary bumps from July could be reduced in the future, and we leave to your good judgment the employee morale issues that could arise. Whatever you decide, please note it is not permissible to try to recover any increases that have been paid already before the rule got a Texas-sized boot.
In our last FLSA blog post discussing the increase, we offered flowcharts for purchase. We will contact those who have purchased to provide an edited chart, but the good news is that those charts are still relevant in terms of the tests to apply to meet those exemptions minus the increased salary threshold denoted within.
Speaking of the upcoming change in administration, we’ve been thinking a lot about what to expect. As more information emerges about cabinet picks and policy proposals or changes, we plan to share out what you should prepare for in the coming months. That may be a blog post, webinar, or something in between. Stay tuned, and if you have any questions about the FLSA and the Texas injunction, feel free to give us a call at (402) 804-8000 or email us at ksb@ksbschoollaw.com.