Employers navigating wage and hour compliance now have welcome regulatory clarity. The U.S. Department of Labor has formally withdrawn the 2024 final rule that sought to raise the salary thresholds governing the Fair Labor Standards Act's white-collar exemptions, restoring the pre-2024 regulatory framework that many employers continued to apply throughout the litigation.
In May 2026, the U.S. Court of Appeals for the Fifth Circuit dismissed the pending appeals related to the Department of Labor's 2024 final rule, which had revised the salary thresholds applicable to the FLSA's executive, administrative, professional, outside sales, and computer employee exemptions. The dismissals effectively affirmed the lower court vacatur of the rule, leaving the 2024 increases without legal force and signaling the end of a prolonged period of uncertainty for employers attempting to plan compensation strategies around the contested thresholds.
On May 15, 2026, the Department of Labor responded by publishing a notice in the Federal Register implementing the federal court judgments. The notice formally removes the vacated 2024 rule text from the Code of Federal Regulations. With this administrative step, the regulatory landscape now reflects the salary thresholds and duties tests as they existed prior to the 2024 rulemaking, providing a stable basis on which employers may classify exempt employees.
For employers, the practical implication is significant. Organizations that paused reclassification efforts or salary adjustments during the litigation may now proceed with greater confidence that the pre-2024 thresholds govern exempt status determinations. Those that implemented compensation increases or reclassified employees in anticipation of the 2024 rule should carefully evaluate whether to maintain those changes, taking into account employee relations considerations, state and local wage laws that may impose higher standards, and any contractual commitments made during the transition period.
Employers should also continue to monitor developments at the Department of Labor, as future rulemaking efforts to revise the salary thresholds remain possible. In the meantime, a careful audit of exemption classifications against the restored regulatory framework is a prudent step for any organization with exempt workforce populations.
This article provides general information only and does not constitute legal advice. Employers should consult qualified counsel for guidance tailored to their specific circumstances.