Uncertainty persists as employers navigate federal wage and hour compliance in the second Trump Administration. Several final rules issued by the Department of Labor (DOL) during the Biden Administration have been mired in ongoing litigation. The DOL has signaled a retreat from the defense of these lawsuits and has begun to roll back other regulations.
As the federal government eases its regulatory grip, employers must continue to comply with more stringent or otherwise different standards that apply under state and local wage and hour laws.
2024 Minimum Salary Rule: Defunct, Perhaps Replaced
The DOL issued a final rule on April 26, 2024, to increase the minimum salary threshold for application of the Fair Labor Standards Act's (FLSA's) "white collar" exemptions. The first of what was to be a two-stage increase took effect on July 1, 2024, adopting a sharp, two-stage increase in the minimum salary floor. On Nov. 15, 2024, a federal district court in Texas invalidated the rule, holding that the DOL exceeded its rulemaking authority. The court found that the new rule set the salary threshold so high that it effectively rendered toothless the "duties test" which (unlike the minimum salary test) is expressly set forth in the statute. The decision came as a relief to the business community, which was staring down an imminent, even steeper minimum salary increase.
The DOL appealed the district court's decision. On April 24, 2025, following the change in administration, however, the DOL moved to hold the appeal in abeyance. (See Reprieve Extended? DOLto Halt Efforts to Restore 2024 Minimum Salary Rule for Exempt Employees.) The DOL told the appeals court it is reconsidering the rule, indicating that the agency probably will not try to resurrect the rule in its current form. The appeal remains pending in the U.S. Court of Appeals for the Fifth Circuit but has been stayed. The next required status update to the court is Aug. 29, 2025.
The Fifth Circuit already ruled the FLSA gives the DOL authority to set a minimum salary threshold. On Sept. 11, 2024, the appeals court issued a decision in Mayfield v. United States DOL, a long-running case that sought to invalidate the 2019 minimum salary increase adopted by the DOL during the first Trump Administration, arguing the DOL has no authority to impose any salary level. After losing the appeal, the Mayfield plaintiff signaled it would file a petition for certiorari at the U.S. Supreme Court, but they recently said they would not seek Supreme Court review.
What it means now.
Currently, the minimum salary level for the white-collar exemption is $684 per week ($35,568 per year), the level set by the 2019 rule. For the highly compensated employee (HCE) exemption, the minimum salary is $107,432.
The DOL likely will withdraw the 2024 rule and undertake new rulemaking, perhaps with a more modest increase. What is less certain is what math the DOL will use if it adopts a more modest increase.
The DOL told the Fifth Circuit it will file a status report on Aug. 29, at which point the agency may make its intentions clearer.
Independent Contractor Rule: Not Enforced, Not Defended
On March 11, 2024, a final rule took effect revising the standard for determining whether a worker is an employee or independent contractor under the FLSA. The 2024 rule formally rescinded the independent contractor rule issued at the close of the first Trump Administration, replacing its more streamlined analysis with a broader multi-factor "economic realities" test.
Five legal challenges to the 2024 rule are pending. The DOL had been mounting a successful defense to the rule, whether on the merits or based on arguments that the plaintiffs, who are themselves independent contractors, lacked standing to sue. But, in filings since April, the agency has asked the courts to put the litigation on ice while it reconsiders whether to defend or rescind the rule. In each case, the DOL has notified the courts that it intends to reconsider the 2024 rule with an eye toward issuing a new rule. (See Employers Still Need to Abide 2024 Independent Contractor Rule Despite DOL Hints of Dropping It.)
Meanwhile, the DOL has paused its own enforcement of the 2024 rule while the agency develops the "appropriate" independent contractor standard. On May 1, the DOL acting wage and hour administrator issued a Field Assistance Bulletin instructing its field staff not to apply the 2024 rule in agency investigations and instead analyze employment status under the framework set forth in a 2008 DOL fact sheet. (See Businesses Get a Break: DOL Won't Enforce 2024 Independent Contractor Rule.)
What it means now.
Although DOL will not enforce the 2024 rule, the DOL has made no formal move to rescind it. The rule remains in effect "for purposes of private litigation" relating to independent contractor status under the FLSA. Courts, however, are not likely to give it much deference in light of DOL's refusal itself to enforce the rule, the DOL's changing positions on the issue, and the agency's likely intent to rescind the rule. Also, the Field Bulletin notes that the DOL may exercise its enforcement authority in specific cases as explicitly directed by the wage and hour administrator.
As we await the DOL's next move, there's good reason to assume the DOL will rescind its 2024 final rule and perhaps restore its 2021 rule, or some modified version of it to address prior challenges to the rule. To resurrect the Trump final rule would require the DOL to undertake formal notice-and-comment rulemaking. It is also possible that Congress will take the matter out of the agency's hands altogether. Several bills are pending in Congress to amend the definition of "employee" under the FLSA. Congressional action would likely be welcomed so employers are not left in a sea of uncertainty, where the tide changes with every change in administration.
"Dual Jobs" Rule for Tipped Workers: 2021 Rule Invalid, Underlying Reg in Doubt
The Biden DOL issued a 2021 final rule amending the 1967 "dual jobs" regulation for tipped employees, applicable when an employer takes the tip credit against the minimum wage. Among other provisions, the rule adopted a policy limiting alleged "nontipped" work to 20% of a server's work time.
On Aug. 23, 2024, the Fifth Circuit vacated the 2021 rule. (See Fifth Circuit Strikes Down DOL Tip Credit Rule: What It Means for Employers.) Consequently, the DOL on Dec. 17, 2024, issued a technical correction, removing the 2021 rule provisions and reinstating the text of the dual jobs regulation as it existed prior to the effective date of the invalidated rule. As restored, the regulation imposes no bright-line time restrictions on nontipped work.
During the first Trump Administration, the DOL issued its own dual jobs rule that would have allowed an employer to use the tip credit so long as the tipped worker's duties were related to the tipped work and performed reasonably contemporaneously with it. The rule, issued in late December 2020, was delayed when the Biden Administration took office, and it never took effect. Some speculated that DOL might reimplement the 2020 rule or go even further and issue a new regulation to replace the haggard 1967 regulation. But, on June 20, the Wage and Hour Division submitted for regulatory review a proposed rule that would rescind the 1967 dual jobs regulation altogether.
What it means now.
As rescission of the dual jobs regulation appears imminent, employers of tipped workers may soon face a regulatory black hole. With no regulation and only the statutory text to guide them, courts that adopted the 80/20 rule may continue to impose it even in the absence of a regulation, although that may be difficult without any regulatory language to support it. After the Fifth Circuit vacated the Biden rule, a number of courts outside the Fifth Circuit have continued to apply the 80/20 rule. For the time being, at least, uncertainty prevails and may continue until DOL issues a workable replacement rule, or Congress revises the FLSA's tip credit provisions to provide clear criteria for when employers may take the tip credit against minimum wage.
Minimum Wage for Federal Contractors: Rescinded Through Executive Order
On March 14, 2025, President Trump rescinded Executive Order (EO) 14026, President Biden's 2021 order increasing the minimum wage for federal contractors. (See Trump Revokes Biden Federal Contractor Minimum Wage Mandate: What to Expect Next.)
The first EO imposing a minimum wage for federal contractors higher than the standard federal minimum was issued by President Barack Obama in 2014. Obama's EO 13658 had set a $13.30 minimum hourly wage for employees working on federal government contracts. During his first term in office, President Trump kept EO 13658 intact, but, in 2018, he ordered that the federal contractor minimum wage would not apply to certain outdoor recreational businesses operating on federal lands. With EO 14026, President Biden increased the federal contractor minimum wage to $15 per hour and provided for annual inflation-adjusted increases. He also discontinued President Trump's exemption for outdoor recreational businesses.
EO 14026 faced several legal challenges, resulting in a circuit split over whether President Biden had exceeded his authority in issuing the EO. The Fifth Circuit upheld the EO as a valid exercise of presidential authority; the Ninth Circuit held that Biden exceeded his authority. The Tenth Circuit was presiding over a challenge by outdoor recreation companies to Biden's rescission of the Trump carve-out when the second Trump Administration took office.
Initially, the Trump Administration continued to defend EO 14026 in these appeals, not to uphold the EO but to preserve the president's authority to regulate federal contracting. With the EO now revoked, those appeals will be moot. On March 28, the Fifth Circuit vacated its opinion and remanded to the district court to dismiss the case. In the Ninth Circuit, where the DOL had filed a petition for rehearing, the DOL argued the case was moot as the agency will be rescinding its implementing rule. The plaintiffs in the Tenth Circuit recently dropped their case after the DOL urged the court to dismiss the litigation as moot.
What it means now.
Under EO 14026, the federal contractor minimum wage had increased to $17.75 per hour on Jan. 1. With the Biden EO rescinded, the minimum wage reverts to $13.30 per hour for contractors covered by EO 13658. Rescinding EO 14026 effectively restores the exclusion for recreational services contractors, so the standard federal minimum wage rate ($7.25 per hour) applies to these businesses.
For now, the DOL rule implementing EO 14026 remains on the books, but DOL has announced it will not enforce the rule and intends to rescind it. That will require formal rulemaking. The open question is whether Trump will maintain EO 13658 and the $13.30 federal contractor minimum wage rate or issue an EO adjusting the minimum wage.
Davis-Bacon Act Final Rule: Partly Enjoined, Pending Rescission
The Davis-Bacon and Related Acts Regulations (DBA) applies to federal contractors and subcontractors working on federal contracts in excess of $2,000 for construction, alteration, or repair of public buildings or public works. The statute requires certain employees to be paid no less than local prevailing wages and fringe benefits for corresponding work on similar projects in the area. A final rule issued on Oct. 23, 2023, adopted sweeping revisions to the DBA regulations and was estimated to impact over one million construction workers.
Industry groups challenged the final rule and, on June 24, 2024, a federal judge in Texas issued a nationwide preliminary injunction blocking the DOL from enforcing several rule provisions. (See Court Enjoins Key Provisions of Davis-Bacon Prevailing Wage Final Rule for Construction Contractors.) The DOL appealed as to two of them: one that expands DBA requirements to contractors that are material suppliers and another that extends the requirements to truck drivers load and unloading at the covered job site.
The appeal is pending in the Fifth Circuit. On May 30, 2025, however, DOL told the appeals court it is reconsidering the regulation and is currently in settlement discussions with plaintiffs. Another case is pending in a Texas district court, filed by another construction trade group. The court recently extended a litigation stay to Oct. 11, 2025, when the parties will "propose next steps in the litigation."
What it means now.
The final rule's material supplier and truck driver provisions continue to be enjoined nationwide. Much of the 2023 final rule remain in effect, though, including a revised definition of "prevailing wage," periodic adjustments for wage rates not set by collective bargaining agreements, increased recordkeeping requirements, and a provision that allows the DOL to adopt wage rates set by state and local governments under certain circumstances.
Although the DOL has expressed in ongoing litigation that it will revisit its 2023 rule, the agency has not issued a formal statement of non-enforcement. Such a statement is unnecessary as to the three enjoined provisions, and the DOL's website clearly identifies the rule provisions that may not be enforced. Still, the DOL does not appear to have an appetite for enforcing them in their current form, given its statement to the court in both ongoing cases that it is actively reviewing the provisions "in order to determine whether to propose rulemaking and seek comments on whether they should be withdrawn, revised, or retained in some form." It is likely the DOL will ease the DBA burden for DBA-covered federal contractors. What a revised DBA rule will look like after the normal rulemaking to undo the 2023 rule remains to be seen.
Companionship Exemption: Third-Party Agency Exclusion En Route to Repeal
The DOL issued a proposed rule on July 2, 2025, to restore application of the FLSA's "companionship services" exemption to third-party agencies that employ home health care workers.
The exemption, first enacted by Congress in 1974, exempted workers who provide in-home companionship services from the FLSA's minimum wage and overtime protections. In 2013, the Obama Administration issued a rule excluding third-party employers from claiming the exemption, meaning the exemption would apply only to workers hired directly by the individual for whom the employee is providing home care services. At the time, the DOL cited a "dramatic transformation" of the home care industry since the third-party employer regulation was promulgated in the 1970s, when most private home care workers were employed directly by a member of the household and not a third-party agency, as is in most cases today. After surviving legal challenges, the rule took effect in Oct. 2015.
The current proposed rule would rescind the 2013 rule in its entirety and restore the exemption for third-party employers. The rule also would restore the overtime exemption for live-in domestic service employees who are employed by third-party employers.
On July 25, the Wage and Hour Division issued a Field Assistance Bulletin advising agency field staff to discontinue enforcement of the 2013 final rule, including for open cases; take no enforcement against third-party employers claiming the exemption; and give no consideration to limits on the time home care workers spend providing "care" when determining whether a home care worker is providing companionship services for purposes of the exemption.
What it means now.
The DOL's internal guidance does not apply to private litigation, so the rule, for now, still applies. Still, the DOL's policy of non-enforcement is significant because the home care industry has been a focus of DOL enforcement activity and a key source of litigation in this area.
If adopted, the proposed rule would be a clear benefit to employers that place health and domestic care employees in client homes. The industry is a frequent target of wage and hour litigation, including disputes over time spent traveling between client sites, compensability of sleep time, and other claims. (In fact, the issue is pending at the U.S. Supreme Court: a home health care company has petitioned for review of a Third Circuit decision addressing compensability of time spent traveling between home care clients. (Nursing Home Care Management v. Secretary, U.S. Department of Labor, No. 24-1171.) Restoring the exemption to third-party employers would bring much-needed clarity and provide significant relief to their customers — typically elderly clients and individuals with disabilities who rely on these critical supports.
The DOL is accepting comments on the proposed rule through Sept. 2, 2025.
Subminimum Wage for Workers with Disabilities: Proposed Rule Withdrawn
The DOL issued a proposed rule last December to phase out the subminimum wage for certain workers with disabilities, permitted under FLSA Sec. 14(c). (See Proposed Rule Would End Subminimum Wage for Employees with Disabilities.) Further rulemaking would depend on action by the current administration, and the fact that there was some bipartisan support in Congress, and a growing movement by states to prohibit the use of the subminimum wage, left some reason for speculation that the administration might finalize the rule. But the DOL withdrew the rule on July 7, 2025, citing concerns that the agency lacks statutory authority to unilaterally terminate the statutorily authorized subminimum wage program.
What it means now.
For most employers, a DOL rule eliminating the 14(c) subminimum wage program would have minimal impact. The number of workers paid a subminimum wage has dropped by about 90% since 2001, and the vast majority of workers paid a subminimum wage were employed in sheltered workshops administered by nonprofit community rehabilitation programs. The elimination of the subminimum wage may happen instead through state action, federal legislation (a bipartisan bill to amend the FLSA to gradually eliminate the 14(c) program was introduced in both chambers of Congress on July 24) or through continued reduced usage of 14(c) certificates.
Bipartisan legislation introduced by U.S. Representatives Bobby Scott (D-VA) and Pete Sessions (R-TX) and U.S. Senators Chris Van Hollen (D-MD) and Steve Daines (R-MT) would phase out the use of subminimum wages for workers with disabilities and transition such workers into fully integrated, competitive employment. The proposed Transformation to Competitive Integrated Employment Act would end the practice of paying workers with disabilities less than the federal minimum wage over five years, invest $300 million in state and local transition efforts, and ensure workers with disabilities can earn fair wages.
Joint Employer Rule: Status Quo, At Least for Now
In March 2020, a final rule took effect addressing the standard for determining whether an employee is jointly employed by two or more entities. The 2020 joint employer rule made joint employment — and thus joint liability for FLSA violations — more difficult to establish. Under the 2020 rule, to establish that an entity is a joint employer, the entity would have to exercise actual control over the workers in question, rather than merely a theoretical "right to control" or reserved control. Also, the 2020 rule expressly excluded as "not relevant" any consideration of an employee's economic dependence on the putative joint employer in determining joint employer status.
A coalition of state attorneys general prevailed in their legal challenge, and a New York federal court vacated most of the rule's provisions. The DOL filed an appeal in November 2020 before the U.S. Court of Appeals for the Second Circuit. Instead of continuing to defend the final rule on appeal, however, the Biden Administration rescinded the rule, effective Sept. 28, 2021, and the Second Circuit dismissed the appeal as moot. The DOL announced it was not going to issue replacement guidance but would instead "continue to follow the law and judicial precedent when evaluating joint employer relationships to enforce worker protections."
What it means now.
Currently, there is no DOL regulation on joint employment in effect. There is some speculation the DOL may reissue a modified version of the 2020 rule. (That speculation increased when the DOL on Aug. 15 released a semiannual agenda referencing a proposed rule on joint employer status under the FLSA. However, the unified agenda promptly disappeared from the federal website.) For now, it will be up to the courts to determine the scope of "joint employer" liability, if at all. Notably, the term "joint employer" is not a term contained in the FLSA.
A Changing Enforcement Approach
The DOL's Wage and Hour Division (WHD) has relaunched its voluntary Payroll Audit Independent Determination (PAID) program, which allows employers to resolve potential FLSA minimum wage and overtime violations (as well as certain FMLA violations) through self-audit and voluntarily reporting to WHD. The program, unveiled during the first Trump Administration but cancelled by the Biden DOL, allows employers to settle violations quickly, without incurring liquidated damages or civil penalties and with a binding release of certain claims.
The WHD also announced it will no longer seek liquidated damage when trying to settle wage violations through administrative proceedings. Internal agency guidance issued by the acting wage and hour administrator takes the position that the FLSA does not authorize the agency to pursue liquidated damages when supervising payments to workers in administrative (pre-litigation) proceedings, and that liquidated damages can only be recovered through a judicial proceeding.
What it means now.
The DOL's new enforcement approach reflects a shift toward compliance assistance and a recognition that employers' routine self-auditing and prompt reporting of potential FLSA violations is the most efficient means of making employees whole. For employers, the WHD's approach is significantly more favorable and alters the risk analysis when considering whether to work with the agency to settle potential wage violations. Employers must be aware of the limits of the PAID program and potential risks, though.
While double damages are off the table at the agency investigation stage, the wage and hour administrator's internal guidance states that the agency's solicitors may continue to seek liquidated damages in cases that go to litigation. Employers should seek advice of counsel when working with the DOL voluntarily or as the target of an agency investigation.
More Deregulation? Watch This Space.
The DOL is in deregulatory mode. Rescinding rules typically involves notice-and-comment rulemaking. President Trump, however, has issued a memoranda instructing agencies to repeal "facially unlawful" regulations without notice and comment if the Administrative Procedure Act's (APA's) "good cause" exception applies. The memoranda also stated that notice-and-comment proceedings are "unnecessary" if rule repeal is necessary to conform to certain Supreme Court decisions — including Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024), which abandoned Chevron deference to federal agency interpretations. The DOL may opt to bypass the formal rulemaking process in some cases, arguing these provisions apply. On July 1, the agency rescinded its policy of engaging in formal notice-and-comment rulemaking when the APA does not require it.
On July 2, the DOL published a proposed rule to remove FLSA subregulatory interpretive guidance or statements of policy from the Code of Federal Regulations. According to its notice of proposed rulemaking, the DOL wants to decodify these provisions, which have not gone through notice and comment, to make clear that they are non-binding. The DOL intends to relocate some, but not all, provisions to appendices in the DOL's Field Operations Handbook. Watch this space for a deeper look at the potential practical impact.
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