LYNCH DALLAS LEGAL UPDATE | DEPARTMENT OF LABOR RULING: A REPRIEVE FOR EMPLOYERS
November 20, 2024
Employers no longer need concern themselves with the January 1, 2025, U.S. Department of Labor (“DOL”) rule raising the salary threshold for overtime compensation. On November 15, 2024, the U.S. District Court for the Eastern District of Texas issued a ruling invalidating and vacating the Dol’s 2024 rules nationwide, in their entirety. The Court found that the agency exceeded its authority under the Fair Labor Standards Act (FLSA). The 2024 rule implemented three changes to the exemptions for executive, administrative, and professional employees’ salary-basis test, which were:
- An increase in the minimum salary level from $684 per week, or $35,568 annually, to $844 per week, or $43,888 annually, starting on July 1, 2024.
- A second increase to $1,128 a week, or $58,656 annually, starting on January 1, 2025.
- An automated mechanism by which the salary minimum would increase every three years based on contemporary earnings data.
An estimated 1 million employees were reclassified as non-exempt (or overtime eligible) effective July 1, 2024. As a result, the Dol’s 2024 rule is no longer enforceable (the January 1, 2025 increase will not go into effect and the July 1, 2024 increase is void.) Additionally, the highly compensated executive salary minimum reverts to $2,066 a week (or $107,432 annually). The DOL could appeal, but it seems futile given the upcoming change in administrations. What should employers do? It would be a blow to workplace morale for you to “roll back” any raises already given, but you can reassess whether to change back any employees who had been exempt and were made “non-exempt” due to DOL 2024 rule.
