Checking in on the Status of the Fair Labor Standards Act Exempt Salary Threshold Increase
Stites & Harbison Client Alert, June 17,
It is two weeks until the July 1, 2024, effective date for the U.S. Department of Labor’s Final Rule (the “Final Rule”) raising the minimum salary level requirement for exempt white-collar employees to $43,888 annually. Now is the time to check in on the status of any legal challenges which might effect that deadline.
The first lawsuit challenging the Final Rule was filed on May 22, 2024, by a coalition of business groups. The coalition chose to file the lawsuit, Plano Chamber of Commerce v. U.S. Department of Labor, in the federal court for the Eastern District of Texas. A second lawsuit was filed on June 3, 2024, in the same court by the state of Texas, State of Texas v. United States Department of Labor. The Eastern District of Texas is known to be favorable to businesses in scrutinizing federal agency rule-making for possible over-reach. The plaintiffs in these cases requested to consolidate the lawsuits, which was granted. Now, the plaintiffs’ motion for injunctive relief preventing the implementation of the Final Rule will be heard on June 24, 2024.
A third lawsuit focusing on challenging the Department of Labor’s “unlawful administrative power” was filed in another Texas district court by a small software development and marketing firm with seven exempt employees, Flint Avenue, LLC v. Department of Labor et al. In this case, the court directed the plaintiff to file any motion for injunctive relief by June 12, 2024. The plaintiff filed a Motion for Stay or Motion for Preliminary Injunction on June 12, 2024, but no hearing date had been assigned as of today.
In all three lawsuits, the plaintiffs challenge the Department of Labor’s statutory authority to raise the minimum salary level to apply for exempt workers, or impose automatic increases. (The next increase after July 1, 2024, is scheduled to take effect on January 1, 2025, to $58,656.) In the alternative, if the Department of Labor was granted the statutory authority by Congress, the plaintiffs argue that the agency exceeded its authority in issuing the Final Rule because the 65% increase to the standard salary minimum “categorically excludes” a large number of employees who currently perform exempt duties, and are classified as exempt. Finally, the plaintiffs assert that if Congress had granted authority to the agency, it was unconstitutional to do so.
This information will be updated as new information becomes available. However, businesses should hope for the best and prepare for the worst in responding to compliance with the Final Rule.