Hi all-
We wanted to share an important update regarding the planned changes to the federal salary thresholds for white-collar exemptions under the Fair Labor Standards Act (FLSA). On November 15, 2024, the U.S. District Court for the Eastern District of Texas issued a ruling that blocks the U.S. Department of Labor’s (DOL) planned salary threshold increase.
What You Need to Know
- Current Thresholds Remain in Place: The court’s decision halts the implementation of the January 2025 salary threshold increase and invalidates the adjustments that went into effect in July 2024.
- White-collar employees: $684 per week ($35,568 annually)
- Highly compensated employees: $107,432 annually
- Immediate Impact: Employers are no longer required to reclassify employees based on the proposed higher thresholds. Employees previously classified as non-exempt under the higher salary limits may now qualify as exempt under the current standards.
Compliance Requirements
To qualify for a white-collar exemption, employees must satisfy all three criteria:
- Duties Tests: Employees must meet the job-specific duties tests outlined below.
- Salary Basis: Employees must be paid on a salary basis.
- Salary Threshold: Employees must earn at least the minimum weekly or annual salary thresholds.
White-Collar Exemption Duties Tests
- Executive Exemption: Employee must manage a department or the enterprise, supervise at least two employees, and have authority to hire/fire or influence such decisions.
- Administrative Exemption: Employee must perform non-manual work related to business operations and exercise discretion and judgment on significant matters.
- Professional Exemption: Employee must perform work requiring advanced knowledge in a specialized field or specialize in areas like teaching, computer analytics, or engineering.
What This Means for Employers
This ruling provides immediate relief by pausing the need for salary threshold adjustments. Employers should:
- Review Employee Classifications: Consider whether employees who were reclassified under the proposed thresholds now qualify as exempt.
- Evaluate Job Duties: Ensure employees meet the duties tests for exemption.
- Monitor Updates: Stay informed about future developments from the U.S. Department of Labor.
If you have any questions or need assistance in reviewing your employee classifications or compliance strategies, please do not hesitate to reach out.
Note for Employers in States Under a Different Threshold: If you’re in a state with higher salary thresholds for exempt employees, those state-specific thresholds will still apply, regardless of the federal court’s block on the January 2025 increase to the federal salary threshold. States like California, Washington, New York, and Oregon have set their own salary thresholds well above the federal level of $35,568, and those higher amounts remain in effect. However, state-specific thresholds may change, so it’s important to regularly review your state’s regulations, as they can differ by region and may be updated periodically. Ensure compliance with the applicable state rules, as they could significantly impact exemption eligibility in your area.