Late last week, a federal court in Texas struck down the U.S. Department of Labor’s Final Rule which was set to require a second increase in the salary level on January 1, 2025. Please see Lake Effect’s June 27, 2024,  June 2, 2024, and April 24, 2024 blogs on the Final Rule which had already mandated an initial salary level increase effective July 1, 2024.

With this decision, the federal court rendered all elements of the Final Rule null and void: the July 1, 2024 salary level increase, the January 1, 2025 salary level increase, and planned future increases for both. In explaining the decision, the court noted that the DOL exceeded its authority by “effectively displac[ing] the FLSA’s [exemption] duties test with a predominate – if not exclusive – salary-level test.”

What does this mean for employers?

Employers no longer need to increase exempt employees’ salary levels to meet the second threshold increase to $1,128 per week ($58,656 per year) effective January 1, 2025. This decision is well-timed, as many organizations are finalizing their 2025 budgets right now. Of note, this also means that the July 1, 2024 increases were not required.

Lake Effect is here to answer questions you may have regarding this decision and its impact on your compensation structure and budget.

The attorneys and HR professionals at Lake Effect can provide guidance on all employment laws, regulations, and agency guidelines. We continue to monitor important legal and HR developments, as well as other information that could impact the workplace. Please watch our blogs and emails for these important updates, as well as discussions of how compliance meets culture. To dive into these issues, contact us at info@le-hrlaw.com or 1-844-333-5253.