Hey, Warriors and Bosses!
On November 15, 2024, the U.S. District Court for the Eastern District of Texas canceled the Department of Labor’s (DOL) rule that raised the salary levels for employees to be exempt from overtime under the Fair Labor Standards Act. This decision applies across the entire country and means that employers don’t need to raise salaries in January 2025 to keep employees exempt from overtime. The court’s decision also cancels the earlier increase that took effect on July 1, 2024.
Before the rule change, employees in executive, administrative, and professional roles were exempt from overtime if they earned at least $684 per week ($35,568 per year). The DOL’s rule increased this amount to $844 per week ($43,888 per year) starting July 1, 2024, and planned to raise it further to $1,128 per week ($58,656 per year) on January 1, 2025.
In a related case, the Fifth Circuit Court of Appeals recently decided that while the DOL can use salary as a factor to determine overtime exemptions, it doesn’t have unlimited power. The court ruled that the DOL cannot set salary levels so high that they overshadow whether an employee’s job duties qualify them for an exemption. The District Court relied on this decision, ruling that the DOL’s new rule ignored whether employees performed the required exempt duties. Because of this, the court nullified the rule.
The DOL may appeal this decision to the Fifth Circuit Court, but the future of the rule is uncertain. Given the Fifth Circuit’s earlier decision, the District Court’s reasoning, and a new presidential administration starting in January, it seems unlikely the rule will survive on appeal.
We’ll share updates as they happen. For now, if you have questions about overtime exemptions or this rule, reach out to your local legal counsel for guidance.
Lisa Smith, SPHR, SCP
Note: This blog post is for informational purposes only and should not be construed as legal advice. Always consult with a legal professional for advice specific to your situation.
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Lisa Smith, SPHR, SHRM – SCP
Certified EEO Investigator (EEOC)
Lead Support and Content Chief – HelpDeskforHR.com
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