Higher Salary Threshold Takes Effect as Legal Challenges Continue

For most employers nationwide, the new salary threshold for who’s exempt from the federal overtime and minimum wage requirements took effect July 1, 2024.

The legal challenges continue, though.

Earlier in the year, three lawsuits had been filed in federal district courts, contesting the Department of Labor’s (DOL’s) final rule. The April 26, 2024, rule said that to pass the salary level test, executive, administrative and professional employees must earn at least:

• $844 per week (i.e., $43,888 per year) at the 2024 midyear mark, and
• $1,128 per week (i.e., $58,656 per year) by January 1, 2025.

As for highly compensated employees, the rule set their total annual compensation threshold at $132,964 per year.

On July 1, 2024, a judge in the northern district of Texas denied a request to block the final rule. That’s because the private company that brought the suit couldn’t show the rule would cause it “irreparable harm.”

Just prior to that, on June 28, 2024, a judge in the state’s eastern district granted a preliminary injunction, saying the DOL had exceeded its authority. As a result of Texas v. DOL, the state of Texas as an employer doesn’t have to comply with the DOL’s final rule for now.

In addition, that judge consolidated a lawsuit, brought by a coalition of business groups, into Texas v. DOL. Note: Despite the consolidation, private employers in Texas (and in all other states) must currently comply with the rule.

Automatic Salary Increases

The DOL final rule included other provisions, such as automatic increases to the salary floor, occurring every three years. Employers would feel the impacts of this starting in July of 2027.

The DOL anticipates that each provision of its final rule will be taken separately when it comes to legal challenges.

The agency made the following statement in its rule: “In the event any provision within a section of the rule is stayed, enjoined, or invalidated, the Department intends that all remaining provisions within that section, plus all other sections, remain effective and operative.”

Whether the courts will agree with that position remains to be seen.