On November 15, 2024, a federal district court in Texas ruled that the U.S. Department of Labor (DOL) did not have the authority to issue a regulation earlier this year that significantly increased the minimum salary levels required for professional, administrative, and executive employees to be exempt from overtime (State of Texas v. DOL, ED Texas, Nov. 2024). The minimum salary had been $684 per week, but as we previously reported, the DOL raised these exempt workers’ minimum weekly salary to $844 effective July 1, 2024, and $1,128 effective January 1, 2025.
Tips: We anticipate this is the last we’ll see of this regulation. Any appeal of this decision would go to the Fifth Circuit Court of Appeals, which is likely to support the district court’s reasoning. Also, the incoming administration will likely withdraw any pending appeals and scrap the rule.
If you raised exempt workers’ salaries to comply with the changes in July 2024 and budgeted money to raise them again in January 2025, you should evaluate whether to make any adjustments and what to communicate to employees. From an employee relations standpoint, it would be very difficult to roll back the July 2024 increases. You still have time to follow up on any messaging that you might already have communicated regarding January 2025 pay raises, however. Remember that in addition to meeting the minimum salary requirements, you must pay exempt employees on a salary basis and ensure that their actual work tasks meet the relevant “duties” test.
Keep in mind that the minimum weekly salary for exempt employees in California and Washington is currently higher than the federal salary of $684 per week. Oregon also has a minimum weekly salary but it will remain lower than the federal salary through at least June 30, 2025. See our Legal Guides, When Is an Employee Exempt Under Federal Law?, Salary Basis Test for Overtime Exemptions, and State Laws on the White Collar Exemptions from Overtime, and contact your Vigilant Law Group employment attorney if you need help determining whether an employee qualifies as exempt from overtime.
