As a follow-up to our spring email alert regarding the U.S. Department of Labor’s (DOL) adjustments to the Fair Labor Standards Act (FLSA) salary thresholds, the U.S. District Court for the Eastern District of Texas recently overturned the DOL’s regulation aimed at raising the salary threshold for “white collar” overtime exemptions. This court decision nullifies both the increase implemented on July 1, 2024, and the one planned for January 1, 2025, affecting employers nationwide.
The court found that the DOL exceeded its statutory authority by creating a “salary-only” test, effectively sidelining the duties-based requirements of the FLSA. It also criticized the DOL’s automatic adjustment mechanism for future salary thresholds, citing a lack of regulatory oversight. Consequently, the previously enacted increases are nullified, though this may have limited immediate impact on employers who have already adjusted their payroll systems.
Despite these changes to the federal salary threshold, some states, including Washington, have their own higher salary thresholds that remain in effect. Washington employers must abide by the Washington salary thresholds for exemptions applicable to their Washington employees. In 2024, the annual salary threshold for determining exempt employees in Washington is $67,724.80 for all employers. For 2025, the annual salary threshold increases to $69,305.60 for employers with 50 or fewer employees and to $77,968.80 for employers with 51 or more employees, with annual increases for all employers thereafter.
Given the changing legal landscape, it is crucial for employers to assess employee salaries or exemption statuses to ensure compliance with applicable state and federal laws. We recommend consulting with legal counsel to determine the best course of action regarding potential reversions or further adjustments.
We will continue to monitor the situation and provide updates on any further developments that may affect your compliance obligations. Should you have any questions or need further assistance, please feel free to contact any member of our Employment Rights, Benefits & Labor group.
