On Nov. 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the Department of Labor’s (DOL) final rule amending the overtime exemption requirements under the Fair Labor Standards Act (FLSA). This ruling reverses the rule’s nationwide salary increases, restoring the pre-July 2024 thresholds.
Background
The FLSA exempts certain white-collar employees in executive, administrative, professional (EAP), and some sales and computer-related roles from overtime pay if they meet specific criteria, including a standard salary level.
2024 Final Rule
The DOL’s final rule, announced on April 23, 2024, increased salary thresholds:
- Effective July 1, 2024:
- EAPs: $684 to $844 per week ($35,568 to $43,888 annually)
- HCEs: $107,432 to $132,964 annually
- Planned Jan. 1, 2025 Increase:
- EAPs: $844 to $1,128 per week ($43,888 to $58,656 annually)
- HCEs: $132,964 to $151,164 annually
The rule also introduced automatic salary updates every three years, starting July 1, 2027.
Court Ruling and Impact
The court found the DOL exceeded its authority by setting salary levels too high and permitting automatic adjustments. The ruling voids both the July 2024 increase and planned future adjustments, restoring salary thresholds to:
- EAPs: $684 per week ($35,568 annually)
- HCEs: $107,432 annually
Employees who lost exempt status due to the July increase may now regain their classification.
The DOL may appeal, though an appeal is unlikely to proceed under the incoming Trump administration. Employers should stay informed about potential updates.
Key Highlights
- April 23, 2024: DOL announced the overtime rule.
- July 1, 2024: Salary levels increased for EAPs and HCEs.
- Nov. 15, 2024: Federal court vacated the rule, restoring prior salary levels nationwide.