By Wm. Joseph Austin, Jr.

Of Counsel, Narron Wenzel, P.A.

Everything old is new again.  Bottom line up top, the salary threshold for the overtime exemptions applicable to executive, administrative, and professional employees is now back to $684 per week, $35,568 per year.  This was the rule established by the United States Department of Labor (DOL) prior to July 1, 2024.  As of November 15, 2024, it is the rule again.  

What happened in the meantime?  Effective July 1, 2024, the DOL set new salary thresholds for these exemptions from overtime, raising them to $844 per week (annualized $43,888); and raising them again effective January 1, 2025, to $1,128 per week, $58,656 per year.  Again, these changes were to be applicable for the executive, administrative, and professional exemptions. 

A short tutorial on this aspect of wage and hour law may be helpful.  To be eligible for one of these so-called white collar exemptions from overtime, the employee‘s position must be salaried (not hourly), the position must be paid the minimum salary (i.e., the salary threshold) set by DOL, and the duties assigned to the position must meet the requirements for one of the listed exemptions.  The change that was to take place (and did for a short while) under the amended DOL rule was the threshold salary required to qualify for the three exemptions mentioned above.  There was no change in the computer employee exemption or in the outside sales exemption.

The large salary threshold increases that were to go into effect in rather quick succession were moderately controversial, not to mention the fact that failure to comply would have resulted in formerly exempt salaried employees becoming eligible for overtime compensation not once but twice in a six-month span of time. Nevertheless, the new DOL rule appeared to be on track.  In September, the Fifth Circuit Court of Appeals held in Mayfield v. U.S. Department of Labor that DOL had the authority “to define and delimit the terms of the [e]xemption.”

However, a U.S. District Judge in Texas held on November 15, 2024 that DOL had exceeded its authority by raising the salary thresholds for the white collar exemptions.  His ruling vacates the DOL rule in its entirety nationwide, including the increase that went into effect on July 1, 2024. As a result, the salary threshold reverts back to the rule which set it at $684 per week or $35,568 annually. However, the DOL could appeal the decision to the Fifth Circuit.

This is a lot of flux, coming and going.  Much digital ink will get spilled about this issue in the ensuing weeks and months.  Bottom line though, the salary threshold for the white collar exemptions, for the time being, is $684 per week, $35,568 per year.  

Watch this space.

If you have questions or if you would like additional details about these exemptions or any other issue in wage and hour law, contact Joe Austin at jaustin@narronwenzel.com or call him at 252-229-1522.