Federal court bans new overtime rule, rolls back salary threshold

On November 15, 2024, a federal judge in Texas struck down a U.S. Department of Labor (DOL) final rule that would have increased the salary threshold, in multiple phases, for exemptions from overtime pay under the federal Fair Labor Standards Act (FLSA). The Act’s “white collar” executive, administrative, and professional overtime exemptions require employers to pay exempt workers on a salary basis at or above a certain salary level and that the employees’ primary job duties satisfy the responsibilities outlined in one of the exemption categories. In short, the Texas court held the overtime rule wasn’t permissible, its effects would be “staggering,” and something had gone “seriously awry” because the rule’s increased salary level would render an employee’s “primary duties” meaningless.

Out with the new, in with the old

The Biden administration promoted the overtime rule as an overdue increase to the salary threshold component of the overtime exemptions. A proposed increase under the Obama administration in 2016 was also blocked at the last minute. The overtime rule would change the exempt status of more than 4 million working Americans and would make them eligible for overtime premium pay.