On Friday, November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated and set aside, on a nationwide basis, the U.S. Department of Labor (DOL)’s final rule increasing the salary threshold for overtime-exempt, salaried workers under the Fair Labor Standards Act (FLSA).

The rule, finalized by the Biden-Harris administration in April 2024, provided that the annual salary threshold required to exempt a salaried worker from federal overtime pay requirements would increase from $35,568 to $43,888 on July 1, 2024, with an additional increase to $58,656 taking effect on January 1, 2025. The rule provided for additional automatic increases at least every three years, the first to occur on July 1, 2027. These increases would primarily affect employees classified as exempt under the administrative, executive, and professional exemptions.

The court found that the rule exceeded the DOL’s statutory authority to “define and delimit” the terms of the exemption.

Most notably, the court’s ruling means that the increase in the overtime threshold scheduled to be effective on January 1, 2025, will not take effect, and the previously implemented increase on July 1, 2024 is effectively nullified. The annual salary threshold previously set by the Trump administration in 2019 – $35,568 – is again effective.

Although the DOL may seek to appeal the court’s ruling, with the incoming Trump administration it appears unlikely that any potential appeal will advance.

Employers that previously implemented the July 1, 2024 increase should consult with counsel before considering whether to rescind those changes going forward.

If you have questions about this development or any other employment law related questions, please contact one of the Blethen Berens employment law attorneys.