5th Circuit affirms DOL’s authority to set minimum salary requirements

In a significant win for the Biden administration, on September 11, 2024, the U.S. 5th Circuit Court of Appeals (whose rulings apply to all employers in Louisiana, Mississippi, and Texas) affirmed the U.S. Department of Labor’s (DOL) authority to set salary levels governing exemptions from federal overtime pay requirements. The court confirmed the DOL’s position that salaried workers making less than $43,888 are eligible for time-and-a-half wages when they work more than 40 hours a week. According to the Biden administration plan, the minimum salary will rise to $58,656 on January 1, 2025, and continue to increase every three years.

Raising the threshold

The rule updates the minimum salary required to fall within the “white collar exemption” under the Fair Labor Standards Act (FLSA), which excludes certain executive, administrative, and professional employees from overtime pay eligibility. In addition to considering job duties, the DOL has repeatedly prevented workers from qualifying for the exemption if their salary falls below a certain level.

Previously, the Trump-era federal overtime rule set the threshold at $35,568. The new, higher threshold would affect four million additional workers and has attracted criticism from employers, which argue the higher threshold will result in significant cost increases in the form of either higher salaries or increased overtime payments.