In a challenge to the Department of Labor’s (DOL) 2019 overtime rule, the U.S. Court of Appeals for the Fifth Circuit affirmed the DOL’s authority to use a salary threshold requirement to define the executive, administrative, and professional (EAP) exemptions under the Fair Labor Standards Act (FLSA). See Mayfield, et al. v. U.S. Department of Labor, et al., No. 23-50724 (5th Cir. Sept. 11, 2024). This decision is a victory for the DOL as it currently defends challenges to its 2024 overtime rule that raised the minimum salary thresholds for the EAP exemptions.

Overview of the Mayfield decision

In 2019, the DOL issued a new rule that raised the minimum weekly salary required to qualify for the EAP exemptions from $455 to $684. Austin-based fast-food operator Robert Mayfield challenged the 2019 rule and argued that the DOL did not have the statutory authority to use a minimum salary threshold as a criterion for determining overtime pay eligibility. Specifically, he argued that based on the delegation language of the FLSA, which mentions duties, not a salary threshold, Congress did not grant the DOL the statutory authority to include salary level as a requirement for the EAP exemption.

The Fifth Circuit dismissed Mayfield’s arguments and determined that the DOL’s power to impose a minimum salary derived from Section 213(a)(1) of the FLSA, which empowers the Secretary of Labor to “define and delimit” the terms of the EAP exemptions. The court reasoned that a salary requirement is consistent with the FLSA’s purpose of protecting lower-wage workers from excessive overtime demands and supported by the strong link between job duties and salary. The court cited Loper Bright and emphasized that when Congress had clearly delegated discretionary authority to an agency, it is the judiciary’s role to ensure that administrative agencies, like the DOL, operate within the boundaries of their delegated authority. Tellingly, the court cautioned that using salary as a proxy for EAP status may not continue to be a permissible exercise of delegated authority if it “yields different results than the characteristic Congress initially chose . . . .” Finally, the court noted that “if Skidmore deference does any work, it applies here” as the DOL has applied a minimum salary rule since 1938.

Context: 2024 DOL salary rule

The DOL is currently defending legal challenges to its 2024 rule, which increased the salary thresholds for EAP exemptions. The 2024 rule, which took effect on July 1, 2024, raised the minimum weekly salary to qualify for the FLSA’s EAP exemptions from $684 to $844. A second increase is scheduled for January 1, 2025 and would increase the weekly salary threshold to $1,128. Subsequently, salary thresholds would adjust every three years based on wage data.

We reported on the pending challenges in a blog post earlier this year. The Mayfield decision, arguably, bolsters the DOL’s position in the legal challenges to the 2024 rule.

Broader implications for employers

While the Fifth Circuit’s ruling in Mayfield supports the DOL’s authority to set minimum salary levels for EAP exempt employees, it leaves open the question of to what extent the salary threshold can be increased before it no longer serves as a proxy for job duties. With challenges to the 2024 overtime rule pending, the future of the salary threshold is still unclear. For now, the Mayfield decision affirms the DOL’s ability to utilize salary thresholds to define the FLSA’s EAP exemptions.