District Court Invalidates Rule Raising ‘White Collar’ Salary Threshold

On November 15, a district court vacated and set aside the U.S. Department of Labor’s (DOL) final regulations to increase the minimum salary level for the Fair Labor Standards Act (FLSA) executive, administrative, professional, outside sales, and computer employee (EAP) or “white collar” exemptions [Texas v U.S. Department of Labor, No. 4:24-cv-499 (E.D. Texas, 11-15-24)].

The court held that each of the three parts of the rule exceeded the DOL’s statutory authority under the FLSA.

The ruling to set aside the regulations applies on a nationwide basis. In June, the same court granted a preliminary injunction to block the rule from going into effect for employees working for the state of Texas.

What the Ruling Means

The increase in the overtime threshold scheduled to become effective on January 1, 2025, will not go into effect. The court also struck down the July 1, 2024, increase that previously went into effect, although many employers may have already increased employees’ salaries to comply.

With the latest ruling, the minimum salary level reverts to the previous threshold: $684 per week ($35,568 per year). The DOL may or may not appeal the ruling. 

For More Information

For more information, see the PAYO Compliance Update, District Court Invalidates Rule Raising ‘White Collar’ Salary Threshold. Compliance updates are emailed to PayrollOrg members and are also available on the Compliance Updates webpage.

To learn more about federal and state laws, regulations, and information to keep your company's payroll operations in compliance, check out Payroll Source Plus!

Jyme Mariani, Esq., is Managing Editor of Payroll Currently and Senior Manager of Payroll Information Resources for PayrollOrg.