Federal Judge Strikes Down Overtime Expansion

A federal judge in Texas has struck down the recently implemented United States Department of Labor (“DOL”) federal overtime salary threshold rule. This 2024 rule raised the minimum salary level for certain employees to be exempt from overtime pay requirements under the Fair Labor Standards Act (“FLSA”).

Generally, the FLSA requires employers to pay non-exempt employees 1.5x their regular rate for hours worked in excess of 40 in a work week. However, the FLSA has many exemptions, including the so-called “white-collar exemptions” (executive, administrative and professional). In order for one of these exemptions to apply, an employee must have specific job duties that meet one of the exemptions, and the employee must make the minimum salary threshold of $684 per week, equivalent to a yearly salary of $35,568.

Earlier this year, the DOL published a final rule which raised this minimum salary threshold to $844 per week, equivalent to $43,888 annualized. This threshold went into effect on July 1, 2024. The DOL’s rule also established additional increases, including one scheduled to take effect on January 1, 2025, where the minimum threshold would have increased to $1,128 per week, $58,656 annualized. The rule then included automatic increases going forward based on average earnings data in the United States.

With the judge’s November 15, 2024 ruling, the original, annualized $35,568 amount is back into effect for all employers nationwide.

What Employers Need to Know

More than likely, employers already altered compensation plans to ensure that workers met the minimum threshold which took effect on July 1, 2024. Employers likely also budgeted for additional pay increases based on the change that was scheduled at the start of 2025.

While it is true that the DOL can appeal the ruling in order to have the 2024 rule reinstated, this is unlikely now that there will be a change in administration. As for whether the DOL would consider an increase to the salary threshold under a Donald Trump administration, employers will have to wait to see.  

If you have questions regarding this latest development, please reach out to your Dinsmore & Shohl LLP labor and employment attorney.