Real World Impact: On September 11, 2024, in Mayfield v. Department of Labor, the U.S. Court of Appeals for the Fifth Circuit upheld the Department of Labor’s (DOL) authority to set minimum salary thresholds for overtime exemptions under the Fair Labor Standards Act (FLSA). This decision reinforces the DOL’s ability to require a minimum salary for executive, administrative, and professional (EAP) exemptions, known as “white-collar” exemptions.
In Mayfield, Robert Mayfield, a Texas-based fast-food franchise owner, challenged the DOL’s 2019 rule that raised the minimum salary for EAP-exempt employees from $455 to $684 per week. Mayfield argued that the DOL exceeded its authority by setting a salary threshold, claiming the FLSA allows exemptions based solely on job duties, not salary levels. After the district court ruled in favor of the DOL, Mayfield appealed to the Fifth Circuit.
The Fifth Circuit affirmed the lower court’s decision, confirming the DOL’s authority to “define and delimit” the terms of the EAP exemptions, including setting a minimum salary level. The court emphasized that using salary as a criterion for exempt status has long been recognized under the FLSA.
Although this case involved the 2019 rule, it also bolsters the DOL’s position in defending the most recent 2024 rule. In July 2024, the DOL increased the minimum weekly salary for EAP exemptions to $844, with a further rise to $1,128 per week scheduled for January 1, 2025. The rule also includes automatic adjustments every three years and raises the threshold for highly compensated employees.
While the Fifth Circuit validated the DOL’s use of salary as a factor in determining exempt status, it noted that the DOL’s authority is not unlimited. The court acknowledged that any salary level must align with congressional intent. The Fifth Circuit’s discussion suggests that, while the 2019 rule is upheld, larger increases— like the one scheduled for January 2025— may face further scrutiny if viewed as exceeding the DOL’s authority.
Additionally, in June 2024, a Texas federal court issued a preliminary injunction blocking the DOL’s 2024 rule for state employees (i.e., those working for the state of Texas), calling it “likely unlawful.” While this ruling currently applies only to Texas state employees, it suggests potential challenges to the broader enforcement of the rule in other jurisdictions. The outcome of these challenges could impact the scheduled January 2025 increase and any future adjustments. The Fifth Circuit’s decision, reinforcing the DOL’s regulatory authority, will likely be pivotal in these legal battles and may strengthen the agency’s defense against similar lawsuits challenging the July 2024 and January 2025 increases.
The Bottom Line
The Fifth Circuit’s decision reaffirms the DOL’s authority to set salary thresholds for FLSA overtime exemptions, supporting the current and upcoming salary increases under the 2024 rule. However, the court’s caution about the limits of this authority and ongoing challenges in other courts, like those in Texas, indicate that significant increases, such as the one scheduled for January 2025, may still face legal hurdles. For now, the increase to $1,128 per week remains set for January 1, 2025. Employers should review their exempt classifications to ensure compliance with the new salary thresholds, while staying informed of potential changes from ongoing litigation.
If you have any questions regarding this Alert, please contact the authors, Jeff Mokotoff, Partner in our Atlanta office, at jmokotoff@fordharrison.com, or Madonna Snowden, Counsel in our Orlando office, at msnowden@fordharrison.com, or any FordHarrison attorney you regularly work with.