Fifth Circuit Dismisses DOL Appeal, Vacating White-Collar Salary Exemption Rule

The New Civil Liberties Alliance agreed to a stipulated dismissal of the government's appeal in the Flint Avenue v. C. This action permanently eliminates a Department of Labor rule that set a $58,656 minimum-salary requirement for white collar employee exemptions from the Fair Labor Standards Act's minimum wage and overtime requirements.

U.S. Court of Appeals for the Fifth Circuit, ending any chance of overturning the prior judgment. The rule prohibited white collar exemptions unless employees were paid a fixed weekly salary of at least $1,128.

It also allowed automatic increases to the minimum salary level every three years, with the first such increase scheduled for July 2027. The Fair Labor Standards Act exempts employees employed in an executive, administrative, or professional capacity from minimum wage and overtime requirements.

U.S. District Court for the Northern District of Texas in the Flint Avenue v. Department of Labor lawsuit. The court vacated and set aside the Department of Labor rule at that time. The government then appealed the ruling but held the appeal in abeyance while the Department of Labor re-examined the rule.

Flint Avenue, LLC, a software company, served as the client of the New Civil Liberties Alliance in the lawsuit. Benzinga reported that the rule would have prevented employers like Flint Avenue from claiming exemptions for millions of white-collar employees paid below the salary threshold, despite offering flexible hours and management responsibilities.

The company competes with larger corporations by providing employees with arrangements such as unlimited vacation, which the rule would have disrupted by forcing reclassification to hourly status.

Mark Chenoweth, president and chief legal officer of the New Civil Liberties Alliance, stated: 'The FLSA Overtime Rule was never lawful, and NCLA is proud to have brought about its demise. John Vecchione, senior litigation counsel at the New Civil Liberties Alliance, stated: 'This Rule would have changed the status of millions of American workers with flexible schedules and decisionmaking status to that of hourly employees, and in some cases it would have eliminated their jobs.

The stipulated dismissal ensures the unlawful change, including the planned July 2027 increase, will not occur.

Benzinga noted that the rule defied the Fair Labor Standards Act's focus on job function rather than salary level for exemptions. By setting aside the rule, the outcome supports small businesses in maintaining flexible work arrangements for executive, administrative, and professional employees.