On November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated and set aside the U.S. Department of Labor (DOL)’s final rule which increased the salary threshold for the “white collar” overtime exemption under the Fair Labor Standards Act. Significantly, this means that the increase in the salary threshold scheduled to become effective on January 1, 2025, will no longer go into effect. The court’s ruling also nullified the July 1, 2024 increase. As such, the salary level in effect prior to July 1, 2024 ($35,568 per year, $684 per week) is now restored.
Before this ruling, the final rule was scheduled to raise the salary threshold to $1,128 per week ($58,656 annually) as of January 1, 2025, and was set to increase every three years.
The court held that the final rule exceeded the DOL’s authority and also found that the DOL lacked the authority for the automatic future increases.
Employers should note that the January 1, 2025, increase will not go into effect as scheduled, and the July 1, 2024, increase is invalidated. The DOL may appeal the court’s ruling; however, because of the upcoming change in presidential administration, it is anticipated that the DOL will be under new leadership and the DOL may therefore abandon any potential appeal once the change in leadership occurs. We recommend consulting an experienced counsel before making any further changes to employees’ salaries that were made in response to the July 2024 threshold increase and/or in anticipation of the January 2025 final rule.