On November 15, 2024, a Texas Federal Court struck down the U.S. Department of Labor’s Final Rule increasing the salary threshold for “white collar” overtime exemptions. The Court’s decision applies to employers nationwide and means that:
- The increase in the salary requirement for overtime exempt status will not go into effect on January 1, 2025 as previously scheduled;
- The Court struck down the prior salary increase that went into effect on July 1, 2025;
- The Court vacated the increased salary threshold for “highly compensated employee” status; and
- The Court vacated a provision of the Final Rule that would automatically increase the salary threshold levels for exempt status every three years.
For employers, this means that the salary threshold for white collar exemptions, such as the Executive, Administrative, and Professional exemptions, is once again $684 per week ($35,568 annually). The threshold salary where an employee qualifies as a “highly compensated employee” also reverts to its pre-2024 level of $107,432 annually. Importantly, this decision does not change the requirement that an employee’s work duties must meet the requirements for exempt status.
While it is anticipated that the Biden Administration’s Department of Labor will appeal the decision, it is uncertain whether the incoming Trump Administration will proceed with the appeal. What is certain is that employers need not comply with the Final Rule’s increased salary thresholds for now.
