Rewinding the Clock
A recent federal court ruling results in an FLSA update and has significant implications for the Fair Labor Standards Act (FLSA) salary thresholds that were set to increase in July 2024 and January 2025.
Summary of the Ruling:
On November 15, 2024, U.S. District Judge Sean Jordan in Texas permanently blocked the Biden administration’s rule that aimed to expand overtime pay eligibility to salaried workers. The judge concluded that the U.S. Department of Labor (DOL) exceeded its authority by basing overtime eligibility primarily on salary levels rather than job duties. This decision reinstates the previous salary threshold of $35,568/year ($684/week), established in 2019.
FLSA Update on Salary Thresholds:
In light of the court’s ruling, it’s essential to update this article to reflect the current status of FLSA salary thresholds.
Pre-July 2024 FLSA Update Rules:
- Salary Threshold: Prior to July 2024, the salary threshold for exempt employees under the FLSA was set at $684 per week, equivalent to $35,568 annually.
- Duties Test: Employees had to meet specific job duties criteria to qualify for exemptions under executive, administrative, or professional categories.
Current FLSA Rules Post-Ruling:
- Salary Threshold: Following the court’s decision, the salary threshold reverts to the pre-July 2024 level of $684 per week ($35,568 annually).
- Duties Test: The criteria for job duties remain unchanged; employees must still meet the duties test to qualify for exemptions.
Implications for Employers and Employees:
- Employers: Should review employee classifications to ensure compliance with the reinstated salary threshold and duties test requirements.
- Employees: Those earning below the $684 per week threshold are entitled to overtime pay for hours worked over 40 in a workweek, provided they do not meet the duties test for exemption.
This ruling underscores the importance of adhering to both salary and duties criteria when determining exemption status under the FLSA. For more detailed information, please refer to the U.S. Department of Labor’s Wage and Hour Division website.
This article is an update to a previous article where we lay out the details of the FLSA Minimum Salary Threshold, including the July 2024 and January 2025 updates that were previously in effect prior to this latest ruling.
With any additional questions or for assistance reviewing the details of your payroll situation in light of this latest FLSA Update, don’t hesitate to contact us at Volpe Consulting and Accounting Services.
