During the Biden administration, the U.S. Department of Labor (DOL) issued a final regulation (the “2024 Rule”) seeking to increase the salary threshold for overtime eligibility for the “white-collar” exemption (also referred to as the “EAP” exemption – executive, administrative, and professional) and the “highly-compensated employee” (HCE) exemption under the Fair Labor Standards Act (FLSA).
Prior to the 2024 Rule, the minimum salary threshold was $35,568 annually ($684/week) for the EAP exemption, and $107,432 annually for the HCE exemption. The 2024 Rule, which took effect on July 1, 2024, first increased the minimum salary threshold to $43,888 annually ($844/week) for the EAP exemption, and $151,164 annually for the HCE exemption. The next threshold increase was set to take effect on January 1, 2025, and would have increased the minimum salary threshold to $43,888 annually ($844/week) for the EAP exemption, and $151,164 annually for the HCE exemption. After the initial jump, the 2024 Rule would require the minimum salary threshold to be updated every three years, beginning on July 1, 2027.
However, in November 2024, the U.S. District Court for the Eastern District of Texas in Texas v. U.S. Department of Labor vacated the rule in its entirety, granting employers temporary reprieve from complying with the 2024 Rule. This was further bolstered by another court ruling in December 2024 issued by the U.S. District Court for the Northern District of Texas in Flint Avenue LLC v. U.S. Department of Labor.
Under Biden, the DOL appealed the Texas decision to the U.S. Court of Appeals for the Fifth Circuit. Following the presidential transition, it was unclear whether the Trump Labor Department would continue to pursue the appeal. However, in February 2025, the DOL appealed the Flint decision to the Fifth Circuit Court of Appeals.
Then, on April 24, 2025, things became a bit clearer when the U.S. Department of Justice (DOJ) filed an unopposed motion to hold the appeals in abeyance, notifying the Fifth Circuit Court of Appeals that, due to the recent change in administration on January 20, 2025, there is new Department of Labor leadership, and the DOL is reconsidering the 2024 Rule. The Court granted the motion on April 29, 2025, holding the case in abeyance for 120 days, and requiring the DOL to file status reports every 60 days.
With the 2024 Rule vacated, the minimum federal salary threshold remains at $35,568 annually ($684/week) for the EAP exemption, and $107,432 annually for the HCE exemption. The future of the 2024 Rule is uncertain, and it remains to be seen what will happen as a result of the DOL’s reconsideration.
Ballard Spahr’s Labor and Employment Group continues to advise employers on labor, employment, and policy issues. We will keep monitoring developments under the new administration and their impact on employers. Please contact us if we can assist you with these matters.