On Nov. 15, a U.S. district court issued a ruling that invalidates the entirety of the U.S. Department of Labor’s (DOL) 2024 final overtime regulations rule.
In April, DOL published its final rule requiring that, effective July 1, 2024, salaried workers making up to $43,888 per year are eligible for time-and-a-half pay if they log more than 40 hours a week. Then, the salary threshold would raise to $58,656 per year on Jan. 1, 2025.
These salary thresholds in the 2024 DOL final rule would have marked an increase from the current threshold of $35,568, which was established in 2020 during the Trump administration and represented the first raise in the rate since 2004.
Also included in the 2024 DOL final rule was a provision to update the salary threshold automatically every three years using current wage data.
Business groups joined in a lawsuit filed May 22 in federal court to block DOL’s final overtime rule from taking effect.
In his November ruling, Judge Sean D. Jordan of the U.S. District Court for the Eastern District of Texas stated that while DOL has the authority to define and delimit the terms of the overtime exemption, “that authority ‘is not unbounded.’”
“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,” Judge Jordan said.
He also said that DOL’s automatic updates to the minimum salary threshold every three years “violates the notice-and-comment rulemaking requirements of the [Administrative Procedure Act].”
In light of this decision, the minimum salary threshold is once again set to the pre-2024 DOL final rule level of $35,568. The threshold for “highly compensated employees,” which also was set to increase in the DOL rule, is set to $107,432.
While DOL may appeal the decision to the 5th Circuit, legal observers anticipate that a DOL under the new Trump administration will likely abandon its defense of the rule. The new administration’s DOL may choose to issue its own rulemaking to update the threshold within the next four years.
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