5th Circuit affirms DOL’s authority to set overtime exemption salary threshold

When it comes to determining which employees are exempt from overtime pay, the U.S. Department of Labor (DOL) has maintained the power to “define” and “delimit” the terms of the executive, administrative, and professional (EAP) white collar exemptions within the Fair Labor Standards Act (FLSA) for decades, including the power to set a minimum salary requirement for qualification. In a recent decision involving the DOL’s 2019 final rule, which increased the salary threshold for exemptions to $684 per week, the U.S. 5th Circuit Court of Appeals ruled the agency had the authority to establish this particular threshold.

Challenge to DOL authority

Texas-based business owner Robert Mayfield challenged the DOL’s 2019 final rule on overtime—specifically, the salary basis threshold set forth in the rule. He argued the FLSA didn’t authorize the DOL to establish salary requirements, only substantive job duties relevant to the EAP exemptions. As a result, he argued the agency lacked the statutory authority to include a salary threshold as a requirement for the EAP exemption.

The 5th Circuit disagreed and upheld the salary requirements in the 2019 rule as a lawful exercise of the DOL’s delegated authority. Mayfield, et al. v. U.S. Department of Labor, et al., No. 23-50724 (5th Cir., Sept. 11, 2024).

Applicability to the 2024 final rule