FLSA Salary Threshold Changes Struck Down

A federal judge in Texas struck down the 2024 increases to the Fair Labor Standards Act (FLSA) salary threshold on Friday, November 15.

The Decision

The salary threshold changes effective July 1, 2024, and January 1, 2025, and automatic updates were deemed unlawful by the U.S. District Court for the Eastern District of Texas and are immediately nullified.

The court held that the U.S. Department of Labor (DOL) rules exceed their authority under the FLSA. Initially, the court issued an injunction in July that applied only to the State of Texas as an employer. The November 15 ruling vacates and sets aside the final rules nationwide. As a result, employers do not have to increase the salary of exempt employees to preserve their exemption status.

The July 1, 2024, threshold of $844 no longer applies. The court reversal resets the weekly salary threshold to $684, or $35,568 for a full-year worker. In addition, the annual compensation requirement for highly compensated employees, which rarely applies to school employees, is reset to $107,432.

The court action shifts the focus for determining exemption status back to the duties tests. A summary of the criteria for the executive, administrative, professional, and computer employee tests can be found in the HR Services Resource Library topics FLSA Exemption Test Criteria for Districts and FLSA Exemption Test Criteria for Colleges (member login required).

Next Steps

Employers who adjusted employee pay in July should leave any increase in effect. The employer has the discretion to change the exemption status of any employee who was reclassified as nonexempt to back to exempt. Before doing so, consider the impact of the change mid-year. If a reclassification is desired, it may be best to implement this at the beginning of a new work year. HR should communicate the information to stakeholders who were planning for a January 1 increase, including payroll, district leadership, and the board.

Resources

More information regarding the decision can be found in the Littler article Federal Court Strikes Down Rule Raising Salary Threshold for White Collar Overtime Exemptions.

The 14th edition of The Administrator’s Guide to the Fair Labor Standards Act will be available in December from the TASB Store. The updated guide includes information about determining independent contractor status, pay for canine (K-9) handlers, protections for nursing mothers, overtime travel requirements, and remote workers.