Daily Archives: November 18, 2024

Employers Don’t Have to Raise Exempt Employees’ Salaries to $58K

On Friday, November 15, a federal judge in the Eastern District of Texas ordered a nationwide halt to the rule increasing the minimum salary that was set to go into effect on January 1, 2025, so that employers no longer have to raise the salary level of employees who are exempt from overtime to $58,656. Instead, the salary minimum level will return to the 2019 level of $35,568 for exempt employees.  

That means that the salary minimum that went into effect on July 1, 2024, of $43,880 per year also was thrown out, but I would not suggest taking back that raise if you just gave it to an exempt employee this summer.

 In addition, the regulation establishing an automatic increase in the minimum salary every three years was overturned by the judge.

The Biden Administration could appeal Friday’s injunction on the salary minimum increase, but it would be futile. The case was heard in Texas, meaning an appeal would have to go to the Fifth Circuit and then the U.S. Supreme Court, neither of which would rule in favor of these increased salary minimums because those courts are packed with conservative Trump appointees. And as soon as President-elect Trump takes office, his administration will abandon the appeal anyway.

It is still very important that employers comply with the Fair Labor Standards Act requirements before making an employee exempt and foregoing overtime pay for that employee. Under the FLSA, which has been the law since 1938, an employee must be paid overtime for all work over 40 hours performed in any one workweek. Paying an employee by the hour and paying overtime is the default category for paying all employees.

Only if a particular employee meets two requirements can he/she legally be paid on a salary basis (and not be paid overtime). Those two requirements are now once again:

  • The employee is paid at least a minimum salary of $684 per week (which is $35,568 per year); and
  • The employee performs the duties of a white-collar executive, professional, or administrator.

The duties test is the much harder test to pass than the salary minimum. For example, someone you are calling a manager must supervise at least two full-time employees and primarily spend most of his/her time in management activities to actually be exempt from overtime. That eliminates almost all fast food assistant managers, working foremen in the construction industry, and others that you may think you could pay on a salary.

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