Employment Blog

As we reported earlier this year, the Department of Labor (“DOL”) issued a final rule on April 23, 2024 (the “Final Rule”), raising the salary threshold for the so-called “White-Collar” Exemptions and the Highly Compensated Employee (“HCE”) Exemption to the Fair Labor Standards Act’s (“FLSA”) overtime pay requirement. The Final Rule increased (a) the minimum weekly salary level for the White-Collar Exemptions from $684 to $844 per week, and (b) the total annual compensation level for the HCE Exemption from $107,432 to $132,964 per year, effective July 1, 2024. The Final Rule would have then increased the minimum salary level to $1,128/week for the White-Collar Exemptions and the total annual compensation level to $151,164/year for the HCE Exemption effective January 1, 2025, with additional increases every 3 years after the initial, July 1 update.

Earlier this summer, however, the State of Texas put a dent in the Final Rule by successfully obtaining a preliminary injunction preventing it from being enforced against Texas in its capacity as an employer.* Shortly thereafter, a similar challenge filed by business groups representing various industries was consolidated into Texas’s suit in the Eastern District of Texas. Texas and the business groups then filed motions for summary judgment, seeking to axe the Final Rule entirely.

On Friday, November 15, the Eastern District of Texas granted the motions and vacated the Final Rule, including its provisions raising the compensation thresholds for exempt employees beginning July 1, 2024.** The Court reasoned that the DOL exceeded its authority to define and delimit the terms of the exemptions. Importantly, the November 15 ruling applies nation-wide and to all employers—not just the State of Texas. The ruling also means that the previous compensation thresholds for exempt employees established in 2019—a minimum of $684/week for the White-Collar Exemptions, and $107,432/year for the HCE Exemption—are back in effect.

The DOL now has the option of appealing to the Fifth Circuit. But even if it does, many analysts believe the DOL is unlikely to continue pursuing an appeal under the incoming Trump administration. It is worth noting, however, that the 2019 rule raising the minimum compensation thresholds to their current level of $684/week (previously $455/week) for the White-Collar Exemptions and $107,432/year (previously $100,000/year) for the HCE Exemption was issued during the first Trump administration. Thus, a future increase above the current levels is not out of the question. As always, Porter Hedges’ dedicated team of labor and employment attorneys will continue to monitor developments in this space and would be happy to assist. Please contact a member of our team with any questions.

* State of Texas v. U.S. Dep’t of Labor, et al., No. 4:24-cv-00499-SDJ, 2024 WL 3240618 (E.D. Tex. Jun. 28, 2024)

** Memorandum Opinion and Order, State of Texas, et al. v. U.S. Dep’t of Labor, et al., No. 4:24-cv-00499-SDJ (E.D. Tex. Nov. 15, 2024), ECF No. 76.