When it comes to the status of the U.S. Department of Labor’s (DOL) recently issued final rule concerning the Fair Labor Standards Act’s (FLSA) “white collar” exemptions, the only thing that appears certain is continued uncertainty. With its initial July 1, 2024, effective date closing fast, the rule is being challenged in a new federal lawsuit filed in a federal court in Texas (Plano Chamber of Commerce et al. v. Su), and could also be upended by a separate case already pending before the Fifth Circuit Court of Appeals (Mayfield v. U.S. Dept. of Labor).

Under the April 24, 2024, final rule, the minimum annualized salary for most white-collar exemptions is scheduled to increase from the current $35,568 per year ($684 per week) to $43,888 per year ($844 per week) on July 1, 2024, followed by larger jump to $58,656 ($1,128 per week) on January 1, 2025. Further increases may be implemented on July 1, 2027, and every three years thereafter applying the same methodology that was used to determine the July 1, 2024, and January 1, 2025, increases. Likewise, the minimum annual salary threshold for the “highly compensated employee” exemption is scheduled to increase from the current $107,432 per year to $132,964 per year on July 1, 2024, with another bump up to $151,164 per year on January 1, 2025. It too will be subject to periodic increases beginning on July 1, 2027.

However, as noted above, on May 22, 2024, the Plano (Texas) Chamber of Commerce and a number of other business and industry groups filed a lawsuit in the U.S. District Court for the Eastern District of Texas seeking to block the rule and its scheduled minimum salary increases. Notably, this suit was filed in the same District Court that permanently blocked a similar, Obama-era DOL rule that was set to significantly increase salary levels in late 2016.

Additionally, the suit pending in the Fifth Circuit Court of Appeals (the federal circuit that covers Texas, Mississippi, and Louisiana) asks to overturn the most recent DOL minimum salary increase that occurred in 2019 during the Trump Administration (and references the new rule as well on appeal). More specifically, that case seeks a ruling that the DOL lacks the authority to order any minimum salary for the white-collar exemptions. If the appeal is successful, such a ruling would likely block the new final rule as well as the 2019 version and send the matter to the U.S. Supreme Court for a final determination.

We will update you here on any significant developments. While it is possible the final rule will be stayed or enjoined before the initial effective date, employers impacted by the rule should make contingency plans for increasing salaries of exempt employees who are below the new threshold or re-classifying them as hourly or salaried non-exempt. If you have any questions about the final rule, please contact Manolis Boulukos, or any member of the Workplace Solutions practice group.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.