The U.S. District Court for the Eastern District of Texas last Friday (Nov. 15) issued a decision invalidating a U.S. Department of Labor (DOL) rule that raised the salary thresholds for exempting certain salaried employees from federal overtime pay requirements.
The court ruled the DOL overstepped its authority with the regulation, halting planned increases that were set to take full effect in 2025.
What is the overtime rule that has now been blocked?
The DOL rule, implemented on July 1, 2024, raised the minimum salary threshold for exempting executive, administrative or professional employees from $684 per week ($35,568 annually) to $844 per week ($43,888 annually). It also established a second increase to $1,128 per week ($58,656 annually) scheduled for January 1, 2025.
In addition, the DOL rule increased the total annual compensation threshold for the highly compensated employee exemption from $107,432 to $132,964 in July 2024, with a further hike to $151,164 planned for the start of 2025.
With the court’s decision, the new rule is nullified and the minimum salary threshold for overtime exemption remains at $35,568, with the highly compensated employee threshold set at $107,432.
How should employers respond to this decision?
- Employers should continue to seek the guidance of legal and HR before making any changes or decisions.
- They should continue to follow updates on this issue to stay current.
- Employers that previously adjusted the salaries or exemption status of employees set by the July 1, 2024 increase are advised to work closely with legal and HR before moving forward.
- Employers should also remain aware that some states have salary thresholds that exceed the FLSA threshold, including Alaska, California, Colorado, Maine, New York and Washington.
On one final note: the DOL, according to legal experts, may not appeal this new court ruling in light of the upcoming change in administration.
impactAction: If you have questions about this court ruling or need assistance with any aspect of your organization’s overtime processes, contact us at info@impacthrllc.com or 443-741-3900.