Hunton Employment & Labor Perspectives

As we previously reported, the U.S. Department of Labor (“DOL”) published a final rule in April 2024 (the “2024 Rule”), raising the salary threshold for the Fair Labor Standards Act’s (“FLSA”) exemptions for executive, administrative, professional, and computer employees and the total annual compensation level for the highly compensated employee exemption. The 2024 Rule also provides for periodic, automatic increases going forward. The 2024 Rule went into effect in July 2024.

On November 15, 2024, however, a Texas federal court struck down the 2024 Rule on a nationwide basis.

In 2017, the U.S. Supreme Court issued its ruling in  Bristol-Myers Squibb Co. v. Superior Court of California, San Francisco County (“BMS”), holding the Fourteenth Amendment prevents a state court from adjudicating non-resident plaintiffs’ state-law claims. Since then, various federal courts have considered whether that ruling extends to prevent a federal court from adjudicating claims brought under the federal Fair Labor Standards Act (“FLSA”) by individuals who live and work outside the court’s jurisdiction—and courts have come to vastly different conclusions.

Most companies know the Fair Labor Standards Act (“FLSA”) requires employers to pay employees a minimum hourly wage plus overtime, unless an exemption applies. What may be surprising, however, is how broadly the FLSA and courts applying it define who is an “employer.”

On Tuesday, April 23, 2024, the U.S. Department of Labor (“DOL”) published the final version of a rule originally proposed in September 2023, raising the salary threshold for the Fair Labor Standards Act’s (“FLSA”) exemption for executive, administrative, professional, and computer employees and the total annual compensation level for the highly compensated employee exemption. The final rule also provides for periodic, automatic increases going forward. So, what should employers know about the final rule, and how can they stay compliant with this shifting landscape?