As discussed here and here, a new federal overtime rule raising the salary threshold for overtime exemptions under the Fair Labor Standards Act (FLSA) took effect July 1, 2024, with a second phase increase scheduled for January 1, 2025.   

In the wake of this most recent increase, litigation commenced to challenge the Department of Labor’s (DOL) authority to increase the minimum salary threshold.  However, challenged in the wake of the Supreme Court’s recent opinion in Loper Bright Enterprises v. Raimondo, a case overturning decades of federal agency rulemaking deference, a Fifth Circuit panel, in the case Mayfield v. Department of Labor, upheld the authority of the DOL to establish a minimum salary level for the exemption for overtime eligibility.    

What Does it Mean 

There may be more legal challenges ahead, but for the present, the Mayfield decision confirming the DOL’s rulemaking power over the FLSA indicates that the January 1, 2025 increase will proceed as planned.  

To lower risks associated with changes to employee status, employers will need to carefully review their workforce classification and compensation practices to ensure compliance with the new rule. Proactive planning can help mitigate potential cost increases and compliance risks.