On November 15, 2024, a Texas federal district court vacated an April 2024 final rule issued by the U.S. Department of Labor (DOL), which had increased the salary thresholds for exemptions from federal overtime requirements under the Fair Labor Standards Act (FLSA). Significantly, the court’s ruling struck down the DOL’s rule on a nationwide basis.
On November 26, 2024, the DOL filed a notice of appeal of the court’s decision. For now, however, the DOL’s April 2024 rule does not apply. Notably, it is uncertain whether the incoming administration will even continue moving forward with the DOL’s appeal.
As a result of the Texas federal district court’s decision, the minimum salary exemption threshold for executive, administrative, and professional (EAP) employees reverts to the 2019 threshold of $684 per week ($35,568 per year). Likewise, the minimum salary exemption threshold for “highly compensated employees” also reverts to the 2019 threshold of $107,432 per year. The 2019 threshold amounts are referenced in a prior update on the DOL’s April 2024 rule here.
The DOL’s April 2024 rule had raised the minimum salary exemption threshold for EAP employees to $844 per week ($43,888 per year) starting July 1, 2024, and was scheduled to further increase that amount to $1,128 per week ($58,656 per year) in January 2025. The minimum salary exemption for “highly compensated employees” had also been raised in July 2024 to $132,964 per year and was scheduled to further increase to $151,164 in January 2025. The rule included a provision for automatic updates every three years, beginning on July 1, 2027. However, the court’s decision vacates these increases to the minimum salary exemption thresholds.
With this ruling, the DOL’s April 2024 changes are now void. Employers who had adjusted their salary levels or reclassified employees due to the 2024 rule should reassess their actions and ensure compliance with federal law. Additionally, some states have different salary thresholds for overtime exemptions. Accordingly, employers should also consider state and local laws when making decisions about employee classifications and overtime pay.