What Happened to FLSA Salary Tests?

Background of FLSA Salary Tests

In April of 2024, the U.S. Department of Labor (“DOL”) published a final rule implementing new salary tests for executive, administrative, and professional employees to be considered “exempt” from minimum wage and overtime pay requirements. The rule included increases to the standard salary threshold and the “highly compensated” employee total annual compensation threshold, as well as a method for updating those thresholds in the future.

However, in November of 2024, the U.S. District Court for the Eastern District of Texas vacated the DOL’s final rule after determining the DOL had exceeded its authority. State of Texas v. U.S. Department of Labor, 2024 U.S. Dist. LEXIS 207864 (E.D. Tex. Nov. 15, 2024). The DOL appealed the District Court’s decision to the U.S. Court of Appeals for the Fifth Circuit.

Department of Labor Reconsiders the Rule

The DOL filed a motion in April of 2025 to hold the pending appeal in abeyance so the DOL could reconsider the rule. To date, there has been no further action in the lawsuit, and the DOL has not proposed new rules on this topic.

What would have happened if the DOL Rule had been Upheld?

Had the DOL’s final rule been upheld, the salary tests would have increased the salary levels for an executive, administrative, or professional employee to be considered “exempt” to $844 per week ($43,888 per year) as of July 1, 2024, and $1,128 per week ($58,656 per year) as of January 1, 2025. The total annual compensation for highly compensated individuals would have increased to $132,964 as of July 1, 2024, and to $151,164 as of January 1, 2025.

As a result of the unusual procedural posture of this lawsuit, the District Court decision controls. Therefore, the DOL has chosen enforcement that reverts to the 2019 rules. The currently enforced salary rule requires a minimum salary of $684 per week ($35,568 per year) for “exempt” employees in the executive, administrative, and professional categories, and total annual compensation of $107,432 for highly compensated employees.

Certain “computer-related occupations:”

The salary test also potentially impacts an exemption for “computer-related occupations” such as computer systems analysts, computer programmers, software engineers, and other similarly skilled workers. To be exempt, the employees must be paid at least the same salary threshold discussed above on a salary basis, or they must be paid on an hourly basis at a rate not less than $27.63 per hour.

Primary Duties & Job Titles:

Job titles themselves are not determinative; instead, the employee’s primary duties must consist of:

1. the application of systems analysis, techniques, and procedures, including consulting with users, to determine hardware, software, or system functional specifications;
2. the design, development, documentation, analysis, creation, testing, or modification of computer systems or programs, including prototypes, based on and related to user or system design specifications;
3. the design, documentation, testing, creation, or modification of computer programs related to machine operating systems; or
4. a combination of the above duties, the performance of which requires the same level of skills.

It should be noted that the computer employee exemption does not include employees engaged in the manufacture or repair of computer hardware and related equipment.

Outside sales employees:

A group of employees who may be exempt, but are not embroiled in the litigation over salary thresholds, are “outside sales employees.” The salary requirements do not apply to the outside sales exemption.

Outside Sales Employee Exemption:

To qualify for the outside sales employee exemption, the following requirements must be met:

1. The employee’s primary duty must be making sales or obtaining orders or contracts for services or for the use of facilities for which a form of consideration will be paid by the client or customer; and
2. The employee must be customarily and regularly engaged away from the employer’s place of business.

According to the regulations, the term “sales” includes any sale, exchange, contract to sell, consignment for sales, shipment for sale, or other disposition. It includes “the transfer of title to tangible property,” 29 C.F.R. § 541.501(b) (this likely applies to sales of Bitcoin and other cryptocurrencies). Any fixed site, whether home or office, used by a salesperson as a headquarters or for telephone solicitation of sales is considered one of the “employer’s” places of business, even though the employer is not the owner or tenant of the property.

Information for this article was obtained from the United States Department of Labor, Wage and Hour Division, Fact Sheets #17D, #17E, #17F, and #17H.

For additional information about the status of the salary tests or wage and hour exemptions, please contact a Riley Bennett Egloff attorney.

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Posted: November 16, 2025, by Donald S. Smith