DOL Has Authority to Set Overtime Exemption Salary … For Now
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APPLIES TO All Employers with Employees in LA, MS, TX |
EFFECTIVE September 11, 2024 |
QUESTIONS? Contact HR On-Call |
Quick Look
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Discussion:
In Mayfield v. U.S. Dept. of Labor, the Fifth Circuit Court of Appeals said that the U.S. Department of Labor (DOL) has the authority to set the minimum salary threshold for overtime exempt employees under the Fair Labor Standards Act (FLSA). Interestingly, this case involved the 2019 DOL rule that increased the FLSA salary test under the Trump Administration; it is not in the context of the current 2024 DOL rule released under the Biden Administration. Nonetheless, it may yet have a lasting reach.
Here, the plaintiff claimed that the DOL does not have the authority to set a minimum salary for exempt workers. The court said that the 2019 DOL rule “falls within the Department’s explicitly delegated authority to define and delimit the terms of the Exemption,” but noted that the DOL’s authority “is not unbounded.” The DOL’s rule must still have a “rational relationship” to the text of the FLSA and cannot effectively change the statutory requirements.
There have now been five rulings among the different Circuit Courts stating that the DOL has authority to set a minimum salary level for exempt workers under the FLSA. This will likely go toward supporting the DOL’s authority in the multiple legal challenges currently pending on the 2024 DOL rule. However, the 2024 DOL rule is not out of the woods yet as there are multiple arguments on which the pending legal challenges are based. While we wait for more clarity on this issue, employers should continue preparing for the next exempt employee salary increase on January 1, 2025.
Action Items
- Review the current and upcoming minimum salary requirements for overtime exempt employees here.
- Review current job descriptions and salaries to determine whether to increase exempt salaries to meet the upcoming increase, or to reclassify employees as non-exempt.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2024 ManagEase