On August 31, 2017, in State of Nevada v. United States Department of Labor, the U.S. District Court for the Eastern District of Texas invalidated the Department of Labor’s final rule, which increased the salary threshold for “white collar” exemptions under the Fair Labor Standards Act (FLSA).
Employers claiming that an employee is exempt under the executive, administrative, or professional exemption from FLSA overtime requirements (called the “white collar” exemptions since they pertain to white-collar workers) must show that the employee performs specific job functions (the duties test) and is paid a salary above a certain threshold (the salary test). Under the Obama Administration, the Department of Labor promulgated a final rule that would double the salary threshold, moving it from $455 a week (or $23,660 annually) to $913 a week (or $47,476 annually). The new salary level is based on the 40th percentile of weekly earnings of full-time salaried workers in the lowest-wage and most impoverished U.S. census region—the South—which comprises the states Texas, Oklahoma, Arkansas, Louisiana, Mississippi, Alabama, Georgia, Florida Tennessee, Kentucky, West Virginia, Maryland, Delaware, Virginia, Washington D.C., North Carolina, and South Carolina. The final rule was intended to go into effect on December 1, 2016.