Federal Judge Vacates FLSA Minimum Salary Threshold Increases

On Friday, November 15, 2024, a federal Texas court vacated the April 23, 2024 U.S. Department of Labor (DOL) final rule that increased the minimum salary threshold for Fair Labor Standards Act (FLSA) exemptions (Final Rule), concluding that the Final Rule was unlawful. The court’s decision applies nationwide and results in the minimum salary threshold for FLSA exemptions reverting to the pre-Final Rule level of $684 per week ($35,568 per year). 

The Administrative Procedures Act requires that a reviewing court set aside agency action found to be unlawful. As such, the Federal District Court Judge’s ruling applies nationwide, which includes Michigan. As explained in our June 2024 School Law Notes, the Final Rule increased the minimum salary threshold to $844 per week ($43,888 per year) effective July 1, 2024, and the Final Rule would have increased the minimum salary threshold for exempt employees to $1,128 per week ($58,656 per year) effective January 1, 2025. Given the court’s decision, employers are no longer required to comply with the Final Rule.

Employers that already granted salary increases for FLSA exemption purposes and that want to revert back to pre-Final Rule salary levels should proceed with caution. Although the Final Rule no longer requires higher salaries for FLSA exemptions, employers may have contractually obligated themselves to pay higher salaries. The DOL may also appeal the federal court’s decision. If you have questions about this recent development, please contact your Thrun labor attorney.