December 2024 Newsletter

Department of Labor’s Overtime Rule Struck Down

On November 15, 2024, a Texas federal court vacated the U.S. Department of Labor’s rule increasing the salary thresholds for the “white collar” overtime exemptions. This ruling applies nationwide. In its decision, the Court found that the DOL exceeded its authority by attempting to raise the minimum salary for the executive, administrative, or professional and highly compensated employee exemptions under the FLSA.  

The DOL rule took effect on July 1, 2024 and initially increased the minimum salary thresholds from $684 per week to $844 per week and also increased the minimum salary threshold for the highly compensated employee exemption from $107,432 to $132,964 annually.  The DOL rule would have raised salaries again on January 1, 2025 and provided for further increases beginning July 1, 2027 and every three (3) years thereafter. This decision vacates the entire rule, including the salary increases that previously took effect on July 1, 2024.  

The Court’s decision makes clear that the January 1, 2025 increases will not happen, and the decision retroactively nullifies those increases that took effect July 1, 2024.  This decision restores the minimum salary thresholds to their previous levels—$684 per week for executive, administrative, or professional exemptions and $107,432 annually for the highly compensated employee exemption.  This decision could be appealed but the incoming Trump administration could choose to not pursue the appeal and pursue different salary thresholds.