The Department of Labor announced in April 2024 that it would increase the salary threshold required to exempt a salaried legitimate executive, administrative or professional employee from federal overtime pay requirements. According to a DOL release, "Effective July 1, 2024, the salary threshold will increase to the equivalent of an annual salary of $43,888 and increase to $58,656 on Jan. 1, 2025." In April, the annual salary threshold was $35,568. The release further stated, "Starting July 1, 2027, salary thresholds will update every three years by applying up-to-date wage data to determine new salary levels."
But that is no longer effective. As the National Law Review reported, "On Nov. 15, 2024, Judge Sean D. Jordan of the United States District Court for the Eastern District of Texas ruled that the DOL exceeded its rulemaking authority by raising the minimum salary for exemption as an executive, administrative, or professional (EAP) employee under the Fair Labor Standards Act."
Where Do We Stand Now?
The entire DOL rule appears to have been rescinded, including the planned January increase and the proposed three-year adjustment plan. Notably, even the July raise has been retroactively rolled back. This means employers who implemented salary increases based on that rule might technically reverse them. However, reducing salaries could lead to employee dissatisfaction and outweigh any cost savings.
For many employers, this federal ruling may not change much: several states and local jurisdictions already enforce higher salary thresholds that remain unaffected.
This decision is still unfolding, and legal experts are analyzing the lengthy ruling. We’ll keep you informed as more details emerge. In the meantime, we recommend holding off on any changes until you consult with your trusted advisors. Staying compliant and ahead of changes is our top priority.