Nonprofit Resources
Court Affirms Salary Threshold and Duties in Overtime Exemption
The U.S. Fifth Circuit Court of Appeals has ruled that, along with certain listed duties, the U.S. Department of Labor (DOL) can include a salary threshold in the definition of who qualifies for the executive, administrative, and professional (EAP) exemption from the minimum wage and overtime rules in the Fair Labor Standards Act.
In the Mayfield v. U.S. Department of Labor ruling issued on September 11, 2024, the Fifth Circuit held that “setting a minimum salary level for the EAP Exemption is within the DOL’s power to define and delimit the terms of that Exemption.”
In reaching its decision, the court addressed several legal challenges to the rule. Importantly, it also considered the impact of the U.S. Supreme Court’s recent decision in Loper Bright Enterprises v. Raimondo, which affirmed the authority of courts to review the decisions of regulatory agencies.
While the Mayfield v. U.S. Department of Labor case addressed a challenge to the DOL’s 2019 increase in the minimum salary rule, the court’s reasoning likely provides insight into how pending challenges to the DOL’s 2024 two-stage increase may be decided.
As we previously reported, on July 1, 2024, the salary threshold increased to an annual salary of $43,888, based on the methodology used by the prior administration in the 2019 overtime rule update. The threshold will increase again to $58,656 on January 1, 2025.
However, the Fifth Circuit left open the question of when a salary threshold could be so large as to make the duties that otherwise define the EAP exemption irrelevant. It’s possible that courts considering the pending challenges could find the size of the salary threshold increase — particularly the January 2025 increase — to be so large as to render the duties element of the EAP exemption meaningless. Since the duties element is a core component of the EAP exemption definition, such a determination would likely result in the court finding that the increase is an invalid regulatory overreach.
We will provide updates as they occur. In the meantime, organizations should note that the DOL’s July 1, 2024, minimum annual salary level of $43,888 is already in effect and the January 1, 2025, minimum annual salary level of $58,656 is looming.
We recommend that you prepare now for compliance with the new salary levels effective on January 1, 2025. However, you should monitor the pending challenges in case a court ultimately determines the January 1 increase to be invalid.
Please contact us with any questions.
