District Judge Undoes Federal Rule Increasing Salary Thresholds for Executive-Administrative-Professional and Highly Compensated Employee Classifications

On November 15, 2024, a Federal District Judge in Texas invalidated the United States Department of Labor (DOL) 2024 revisions to the minimum salary thresholds for employees to qualify for the Fair Labor Standards Act (FLSA) Executive, Administrative, and Professional (including artistic) (EAP) exemptions, as well as the Highly Compensated Employee (HEC) exemption.

In April 2024, the DOL issued its final federal rule (2024 Rule) increasing salary thresholds for EAP and HEC classifications. Under the 2024 Rule, the salary threshold requirements were to increase as follows: 

• Effective July 1, 2024, the salary basis threshold increased to $844 a week or $43,888 per year and on January 1, 2025, was to increase again to $1,128 a week or $58,656 per year.
• Effective July 1, 2024, the salary threshold for the HCE exemption increased to $132,964 per year and on January 1, 2025, was to increase again to $151,164 per year.
• The salary thresholds were subject to automatic increases every three years with the next increase slated for July 1, 2027.

EP previously posted and circulated an Alert on the 2024 Rule. See United States Department of Labor Issues Final Federal Rule Increasing Salary Thresholds for Executive-Administrative-Professional Classifications - Entertainment Partners.

As expected, the 2024 Rule faced legal challenges, including a lawsuit before a federal district court in Texas seeking nationwide relief. On November 15th, the district court set aside and vacated the entirety of the 2024 Rule. As a result, the salary thresholds in effect prior to the July 2024 changes currently apply when determining EAP and HEC exemption eligibility:

• EAP employees: $684 a week or $35,568 a year.
• HCE: $107,432 a year.

The November 15th decision does not affect state salary thresholds or state and local rules similar to the FLSA’s EAP salary test. Many of these thresholds exceed the requirements under federal law. Employers in states with salary thresholds higher than the FLSA’s requirements (such as California and New York) must still comply with the state-mandated minimums to maintain exemption status.

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For any questions about this Alert, you may contact:

Robyn Coltin, Director, Employment Law & Litigation Counsel | rcoltin@ep.com
Scott Bishop, Vice President, Employment Law | sbishop@ep.com