The U.S. Department of Labor (DOL) is currently reviewing a recent decision made by a federal court judge in Texas, which overturned the increased salary thresholds for overtime exemptions. This review is being conducted in collaboration with the U.S. Department of Justice (DOJ), according to a DOL spokesperson.
In April 2024, a final rule was issued to update the Fair Labor Standards Act’s (FLSA) overtime exemptions for executive, administrative, and professional (EAP) employees. This new rule aimed to increase the minimum salary thresholds to $844 per week, effective July 1, 2024, and $1,128 per week, effective January 1, 2025. It also included a mechanism for future updates.
On November 15, 2024, U.S. District Court Judge Sean D. Jordan of the Eastern District of Texas invalidated the DOL’s final rule. The judge found that the rule exceeded the agency’s statutory authority under the FLSA by improperly prioritizing salary over job duties in determining overtime eligibility, which contradicted the intent of the FLSA.
The DOL spokesperson explained, “The Court’s decision to vacate this rule immediately reverses overtime protections for one million workers and halts a provision that would have guaranteed another three million workers overtime pay starting in January.”
In the DOL’s final rule, published in the Federal Register on April 26, 2024, the agency estimated that approximately one million employees earning between $684 and $843 per week would be affected by the first update on July 1, 2024. Additionally, another three million employees earning between $844 and $1,128 per week would have been impacted starting January 1, 2025.
Prior to this final rule, the FLSA overtime salary threshold was $684 per week, effective January 1, 2020. This amount resulted from a final rule issued by the DOL in September 2019 under the Trump Administration.
The nullification of the 2024 DOL final rule means that the FLSA overtime salary threshold reverts to the DOL’s 2019 rule of $684 per week. The DOL spokesperson confirmed that, as long as Judge Jordan’s November 15 ruling stands, the salary threshold test for overtime under the FLSA will be $35,568 annually.
This was further acknowledged by a note on the DOL’s webpage regarding overtime pay, stating that the agency will apply its 2019 rule in enforcement. This means that employers nationwide will be in compliance with DOL regulations by applying the $684 per week salary test and the total annual compensation requirement for highly compensated employees of $107,432 per year. The DOL’s message also noted that there are two additional pending lawsuits in federal district courts.
The spokesperson added that the DOL and the DOJ “will determine the next steps in this litigation.” These next steps appear to be the United States filing a notice of appeal regarding the November 15 decision, per the DOL’s note on its website.
