A new Fair Labor Standards Act (FLSA) Rule took effect July 1, 2024, which significantly increased the salary minimum that non-teaching, salaried supervisors and administrators must make to be considered exempt from overtime pay.
On November 15, 2024, a judge in the U.S. District Court for the Eastern District of Texas issued a nationwide injunction preventing the Department of Labor from implementing the new rule in its entirety. The court reasoned that the Department of Labor exceeded its authority and effectively displaced the “duties test” in the law. As a result of the ruling, the entire new rule, including the July 1 salary increase is no longer in effect, and the upcoming January 1 increase to the salary minimum will not take effect.
The court stated, “… the Department’s 2024 Rule contemplates sweeping changes to the … regulatory framework, designed on their face to effectively displace the FLSA’s duties test with a predominate – if not exclusive – salary-level test,” Continuing, the court concluded, The Department simply does not have the authority to effectively displace the duties test with such a predominant salary-level test.” (State of Texas v. Dept. of Labor, E.D. Tex. No.4:24-CV-499)
The Department of Justice could appeal the ruling, and the Fifth Circuit Court of Appeals or the United States Supreme Court could lift the injunction and reinstate the rule. Due to the changing administration, it is likely that even if an appeal were filed, it could be withdrawn.
It is interesting to note that very similar circumstances occurred in 2016 when the same federal district court in Texas blocked another DOL rule raising the minimum salary for the executive, administrative professional (EAP) exemption.
What this means for your district:
The ruling means the minimum salary threshold for meeting the executive, administrative, or professional (EAP) exemption will remain as it was prior to the new rule taking effect: $684 a week (or $35,568 annually) for the EAP exemption and $107,732 for the highly compensated employee exemption.
If districts were planning to raise the salaries for nonteaching, salaried supervisors and administrators to ensure the salary basis test was met for purposes of the EAP exemption, there is currently no need to implement those changes. If salary increases had already been given, if reductions were contemplated, they would need to be part of a uniform plan affecting the entire district. If you have specific questions about how the EAP exemptions might apply or how the ruling affects a specific situation, please contact counsel.