This post was written by Rachel Felton and Neva Stotler.
Earlier this year, the U.S. Department of Labor announced a final rule which provided for two increases to the salary threshold amount that must be satisfied for employees to be exempt from the Fair Labor Standards Act’s (“FLSA”) overtime pay requirements. Under the final rule, the salary thresholds for the executive, administrative, professional, and highly compensated employee exemptions increased on July 1, 2024, and were to increase again on January 1, 2025. The final rule also contained an escalator provision whereby the salary threshold would automatically adjust every three years based on wage data beginning on July 1, 2027.
On November 15, 2024, the U.S. District Court for the Eastern District of Texas struck down the rule. The Court’s ruling means that the January 1, 2025 salary threshold increase will not go into effect. The ruling also invalidates the July 1, 2024 increase and escalator provision for automatic adjustments every three years. For now, the salary threshold for the exemptions has returned to $684 per week/$35,558 per year. The U.S. Department of Labor may appeal the Court’s ruling, but it is very unlikely that any appeal will be seen through completion given the upcoming change in administrations in January 2025. It remains to be seen whether the Trump administration will push for an increase in the salary threshold, but if it does, the increases will undoubtedly be less than those thresholds in the now stricken rule.
