On April 23, 2024, the US Department of Labor issued new rules increasing the minimum salaries necessary for executive, administrative, professional, outside sales, and computer employees to qualify as exempt for the Fair Labor Standard Act’s (FLSA) minimum wage and overtime rules. The new salary threshold increases are scheduled to start on July 1, 2024.
However, as expected, legal challenges have been filed challenging the new rules. On May 22, 2024, the Plano Chamber of Commerce, other business groups, and at least one company filed a lawsuit asking the U.S. District Court for the Eastern District of Texas to block the new rules. The plaintiffs argue, at least in part, that the DOL “acted arbitrarily, capriciously, and otherwise not in accordance with the law” when the new rule was issued.
If the plaintiffs in the case are successful in obtaining at least a temporary order, it is likely the delay of the new rules will persist for multiple years until a decision is issued by the court on the merit of the claims. Moreover, if the rule is delayed and Trump is elected as president, it is possible the Trump’s DOL may withdraw its challenge to the plaintiffs’ lawsuit essentially killing the new rules.
Also, although it will not impact the new rule or the lawsuit, on June 5, 2024, a large number of Congressmen filed House Joint Resolution 166 disapproving of the DOL’s new rule.
The New Rule
As a reminder, according to the DOL’s new rule, minimum salaries will increase as follows:
| DATE | STANDARD SALARY LEVEL | HIGHLY COMPENSATED EMPLOYEE TOTAL ANNUAL COMPENSATION THRESHOLD |
|---|---|---|
| Before July 1, 2024 | $684 per week (equivalent to $35,568 per year) | $107,432 per year, including at least $684 per week paid on a salary or fee basis. |
| July 1, 2024 | $844 per week (equivalent to $43,888 per year) | $132,964 per year, including at least $844 per week paid on a salary or fee basis. |
| January 1, 2025 | $1,128 per week (equivalent to $58,656 per year) | $151,164 per year, including at least $1,128 per week paid on a salary or fee basis. |
| July 1, 2027, and every 3 years thereafter | To be determined by applying to available data the methodology used to set the salary level in effect at the time of the update. | To be determined by applying to available data the methodology used to set the salary level in effect at the time of the update. |
