On Friday, November 15, 2024, a federal judge in Texas struck down the 2024 U.S. Department of Labor Rule that substantially increased the minimum salary thresholds for employees to qualify as exempt from overtime pay under the Fair Labor Standards Act (“FLSA”). Under the FLSA, employees are exempt from overtime if they perform bona fide executive, administrative, or professional duties, and are paid at least a minimum designated salary. Most employers have already implemented the first phase of the increase in July, and have prepared to implement the next increase scheduled for January 2025, and automatic increases tied to inflation every three (3) years. Now, as a result of the court decision, the minimum salary increases under the 2024 Rule have, effectively, been scrapped. This is not the first time the Department of Labor tried, unsuccessfully, to increase the minimum overtime salary threshold – the court previously struck down a Rule issued by the Department in 2016 to increase the threshold. 
The 2024 DOL Overtime Rule increased the minimum annual salary threshold, effective July 1, 2024, from $35,568 to $43,888. The next salary threshold was scheduled to take effect on January 1, 2025, and rise to $58,656. After that, subsequent automatic increases were slated to take effect every three (3) years, based on inflation data.
However, the court struck down the 2024 Rule, finding that the Department of Labor did not have the statutory authority to mandate the minimum salary thresholds. The court explained that, “[a]s was true of the 2016 Rule, the minimum salary level imposed by the 2024 Rule ‘effectively eliminates’ consideration of whether an employee performs ‘bona fide executive, administrative, or professional capacity’ duties in favor of what amounts to a salary-only test.”
The court decision has nationwide effect.
The Department of Labor has the right to appeal the decision. However, given the upcoming change of administration resulting from this month’s election, it is uncertain whether the Department of Labor will appeal the decision and whether an appeal would prove successful.
Have questions about the 2024 DOL Overtime Rule? Reach out to our Employment Law & Labor Relations team to understand how this impacts your business.
