On November 15, 2024, in State of Texas v. United States Dep’t of Labor, the United States District Court for the Eastern District of Texas ruled that the U.S. Department of Labor (DOL) exceeded its rulemaking authority by issuing a rule in April 2024 raising the minimum salary for exemption as an executive, administrative, or professional (EAP) employee under the Fair Labor Standards Act. 

Under the DOL’s rule, the minimum salary for exemption as an EAP employee, with limited exceptions, increased from $684 per week ($35,568 annualized) to $844 per week ($43,888 annualized) effective July 1, 2024.  A second increase would have raised the salary threshold to $1,128 per week ($58,656 annualized) effective January 1, 2025.  The rule also increased the minimum total annual compensation level for exemption as a “highly compensated employee” (HCE) and provided for automatic triennial increases in the minimum compensation levels for exemption beginning on July 1, 2027.  The November 2024 decision declared the DOL’s rule an “unlawful exercise of agency power” and vacated it nationally.

The DOL—represented by the U.S. Department of Justice, Civil Division—filed an appeal of the decision with the U.S. Court of Appeals for the Fifth Circuit, notwithstanding that the incoming Trump administration was all but guaranteed to have no interest in appealing a decision curbing agency rulemaking power and saving American businesses untold billions in new overtime expenses.  Lo and behold, within 48 hours after Inauguration Day, the government requests a 30-day extension of time, through March 7, 2025, to file its opening brief on appeal “because of the press of other business.”  We wouldn’t hold our breath for the Trump Justice Department filing anything more in this case other than a stipulation withdrawing the appeal.

So is the DOL done rulemaking with respect to the minimum salary for exemption?  It may be for the next four years, but likely not forever.  The Fifth Circuit’s September 2024 decision in Mayfield v. United States Dep’t of Labor held that the DOL’s authority to “define” and “delimit” the terms of the EAP exemptions includes the power to set a minimum salary for exemption—albeit with some meaningful limitations.  On February 14, 2025, the Fifth Circuit denied Mayfield’s petition for rehearing en banc.  We’ll see if Mayfield tries to take the issue to the U.S. Supreme Court.

Proskauer’s Wage and Hour Group is comprised of seasoned litigators who regularly advise the world’s leading companies to help them avoid, minimize, and manage exposure to wage and hour-related risk.  Subscribe to our wage and hour blog to stay current on the latest developments.