A Texas federal judge reversed the Department of Labor’s (“DOL”) salary threshold that was supposed to increase the minimum salary level for employees to be exempt from the federal Fair Labor Standards Act (“FLSA”). The salary threshold increase was supposed to happen on January 1, 2025. Many employers have been struggling to come up with a financial plan to meet the anticipated new salary increase. As a result of the ruling, the 2025 salary increase is essentially being erased from law.
The federal judge also overruled the existing salary threshold that previously went into effect earlier this year. This federal ruling applies to all employers, nationwide, not just employers in Texas.
As background, the FLSA provides guidelines for employers to determine which employees qualify for exempt status from overtime payment requirements. Those guidelines state that certain employees, including bona fide executive, administrative, or professional employees, are exempt from overtime requirements. This means that employers do not have to pay exempt employees time-and-a-half for hours worked over 40 hours a week.
What the new Texas federal ruling means for employers is that the law no longer requires employers to increase the salary of exempt employees to meet the 2025 salary threshold. This means that the operating salary threshold reverts back to $684 per week or $35,568 per year. Technically, employers could reverse any salary increase that they previously gave employees earlier this year. We recommend reaching out to your BHGR employment attorney before making that decision.
The Texas federal ruling may get appealed, but any appeal is likely to go nowhere with the new presidential administration taking over in January 2025. Employers should also remember that some state and local laws provide salary thresholds that are higher than the FLSA. If you need help navigating these changes, please reach out to your BHGR employment attorney.