Exempt Salary Threshold Changes Have Been Struck Down

Earlier this year, the Department of Labor (DOL) announced an update to the Fair Labor Standards Act (FSLA) to raise the minimum pay threshold for salaried employees. A Texas federal court has since struck down the measure. Here’s what you need to know.

What Were the Proposed Increases to the Exempt Salary Threshold?

The DOL’s original update stated that, as of July 1, 2024, the minimum annual pay threshold for a salaried employee would be increased from $35,568 to $43,888. The threshold was set rise again to $58,656 as of January 1, 2025.

Now that the update has been struck down, the salary threshold for exempt employees will return to the previous level, $35,568.

Which Employees Does the Exempt Salary Threshold Apply To?

Employees who are classified as “exempt” from the FSLA’s overtime regulations must be paid at least the minimum salary. FSLA outlines specific criteria for which employees are exempt and which are not exempt from regulations:

Nonexempt Employees

Nonexempt employees are typically paid by the hour; they must be paid at least the minimum wage and are automatically eligible for overtime pay.

Exempt Employees

Exempt employees do not qualify for the minimum wage or overtime pay. For an employer to classify them as “exempt,” the employees must meet both of the following criteria:

1. The employees must perform specific responsibilities in their job roles.
   • Executive, Administrative or Professional (EAP) Employees
     • Executive: Employees primarily engaged in managing the enterprise or a department
     • Administrative: Employees performing office or non-manual work directly related to management policies or general business operations
     • Professional: Employees in a field of science or learning requiring advanced knowledge
     • Computer: Those engaged in computer systems analysis, programming or software engineering
   • Highly Compensated Employees (HCEs): Employees earning above a specified threshold and performing office or non-manual work
2. Employers must pay employees the minimum annual salary required by the FSLA.

Teachers, practicing doctors and lawyers and academic administrative employees are not subject to the salary threshold.

Learn More and Connect with an Advisor

To learn more about these regulations and how your unique company should respond, connect with your Warren Averett advisor directly, or ask a Warren Averett Workplace specialist to reach out to you to start the conversation.

This article was originally published on May 15, 2024, and most recently updated on November 25, 2024.