On November 15, 2024, a federal court in Texas invalidated the Department of Labor’s recent rule that increased the minimum salary thresholds for exempt employees. This decision nullifies the July 1, 2024, increases, cancels the planned January 1, 2025, adjustment, and eliminates the automatic updates previously scheduled to occur every three years.
As a result, the salary thresholds revert to their pre-July 1, 2024, levels. Most executive, administrative, and professional employees must now earn at least $684 per week ($35,568 annually) instead of $844 per week under the overturned rule. Similarly, the minimum salary for highly compensated employees returns to $107,432 annually, down from the $132,964 required by the invalidated rule.
Action Items for Employers:
- Reevaluate Compliance: Employers may roll back salary changes implemented in July 2024 and discontinue preparations for the January 2025 increase. However, pay cannot be reduced retroactively, and employee classifications cannot be changed retroactively either.
- Communicate Clearly: Notify employees of any changes to their pay or classification before implementation, ensuring compliance with any applicable state or local notice requirements.
- Consider Employee Morale: Evaluate how these changes might affect employee morale. Transparent communication about the reasoning behind these adjustments—pointing to legal developments and business needs—can help maintain trust and minimize potential negative impacts.
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