Court Upholds Authority of DOL to Set Salary Thresholds for FLSA Overtime Exemptions
On November 15, 2024, the Eastern District of Texas nullified the Department of Labor’s (DOL) 2024 rule that raised the salary thresholds for the Fair Labor Standards Act (FLSA) exemptions. According to the court, the DOL exceeded its authority by emphasizing salary levels over job duties. This potentially displaced the duties-based exemption analysis required by the FLSA. The decision will halt enforcement of the 2024 rule, including the planned January 2025 increase to $1,128 per week ($58,656 annually). Employers are instead required to comply with the 2018 threshold of $684 per week or $35,568 per year) and must closely monitor developments as further appeals and regulatory action could follow.
The recent case, Mayfield v. Department of Labor, affirmed the DOL’s authority to set salary thresholds for FLSA overtime exemptions. The ruling comes ahead of the scheduled salary increase in January 2025, which would raise the weekly salary requirement for exempt employees from $844 to $1,128. The decision upholds the DOL’s regulatory authority while also acknowledging concerns that the increase could impact the duties test for exemption classifications.
The FLSA and recent salary threshold increases
The FLSA sets the minimum wage, overtime pay, and other labor standards that impact the majority of public and private sector employees. For an employee to qualify for the “white-collar” exemptions (executive, administrative, and professional) their roles must meet certain criteria related to duties and be compensated at or above the prevailing salary threshold. The DOL updates the threshold at various times to reflect changes in the economic conditions and maintain the standard of living of exempt employees.
As of 2019, the threshold was raised to $684 per week or $35,568 annually. On July 1, 2024, the threshold was increased to $844 per week or $43,888 annually, with another increase scheduled for January 1, 2025, which would have been $1,128 per week or $58,656 annually. The changes are intended to extend overtime protections but have also prompted legal challenges from business groups and some states. These interests have argued that the DOL has exceeded its authority.
Mayfield examines regulatory authority
In the recent lawsuit, Mayfield v. The Department of Labor, the plaintiffs argued that the DOL overstepped its bounds by setting a salary threshold for exempt employees. They argued that the FLSA’s language focuses on job duties (not salary) for determining exemptions. The Fifth Circuit disagreed with the plaintiffs, ruling that the DOL has the power to define salary levels as part of its regulatory responsibilities.
The court also noted that salary thresholds have been a longstanding aspect of the FLSA exemptions, and the DOL’s adjustments fall within its delegated authority.
Nonetheless, the decision acknowledged that an excessively high salary threshold might overshadow the duties, which is a key component when determining an employee’s exempt status.
Talk to a Tampa, Florida FLSA Attorney Today
The Tampa employment attorneys at Florin Gray represent the interests of employees who have failed to receive overtime pay in accordance with the FLSA. Call our office today to schedule an appointment, and we can begin discussing your case right away.
Source:
nixonpeabody.com/insights/alerts/2024/10/01/dol-authority-to-set-salary-thresholds-upheld
