By Mandy Nevius, MBA, SPHR, Human Resources Director
What employers need to know for compliance with FLSA
On November 15, 2024, the U.S. District Court for the Eastern District of Texas struck down the Department of Labor’s (DOL) April 2024 Final Rule on overtime exemptions under the Fair Labor Standards Act (FLSA). This recent decision nullifies the July 1, 2024, increase and future increases that would have significantly increased salary thresholds for overtime exemptions on January 1, 2025, and every three years thereafter.
In State of Texas v. Department of Labor (case No. 24-cv-468-SDJ), the court determined that the DOL exceeded its authority by allowing salary levels to overshadow the duties test central to the Executive, Administrative, and Professional (EAP) exemption. Judge Jordan wrote, ”The minimum salary level imposed by the 2024 Rule ‘effectively eliminates’ consideration of whether an employee performs ‘bona fide executive, administrative, or professional capacity’ duties in favor of what amounts to a salary-only test.”
Key takeaways for employers
- The original thresholds that were in place prior to the April ruling are restored for employers.
- Executive, Administrative, and Professional (EAP) exemption: $684 per week ($35,568 annually).
- Highly Compensated Employee (HCE) exemption: $107,432 annually.
- A consideration for employers that increased salaries to meet the now-invalid thresholds is to weigh both legal compliance and employee morale before reducing salaries to the restored exemption amounts.
- The DOL has the option to appeal to the Fifth Circuit Court; however, the incoming Trump administration may have different priorities.
- Consider reaching out to your legal advisor to ensure your company meets FLSA compliance and addresses any potential impacts on your employees.
Background of 2024 rule change
The information provided here is intended for general informational purposes only and does not constitute legal advice. Please consult your labor and employment attorney if you have questions. Your Keiter Opportunity Advisors are closely monitoring these and other changing regulations that may impact your business.
About the Author
Mandy Nevius, MBA, SPHR, Human Resources Director
Mandy has over 20 years experience working with public accounting firms in the areas of training, career development, compensation, and recruiting. She shares her knowledge and insights on labor regulations and upcoming changes with her colleagues and the Firm’s clients.
More Insights from Mandy NeviusThe information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.
