New court ruling shakes up overtime threshold—again

by Tammy Binford

A ruling from a federal district court in Texas has once again changed the criteria for determining which employees should be eligible for overtime pay.

Pre-July 1 threshold back in force

Under a rule from the Biden administration’s Department of Labor (DOL) that took effect on July 1, 2024, the minimum threshold for exempt status under the Fair Labor Standards Act (FLSA) rose to $844 a week ($43,888 a year). The pre-July 1 threshold had been $684 a week ($35,568 a year).

Another increase to the threshold was scheduled to take effect on January 1, 2025. That threshold would have set the minimum level for exempt status at $1,128 a week ($58,656 a year).

But Judge Sean Jordan of the U.S. District Court for the Eastern District of Texas ruled on November 15 that both the July 2024 and the planned January 2025 thresholds violated the FLSA. Therefore, the $684-a-week level is back in force.

Judge’s reasoning

Martin J. Regimbal, an attorney with The Kullman Firm in Columbus, Mississippi, explains that the Texas judge held that in setting the new thresholds, the DOL exceeded its authority under the FLSA because the new thresholds “elevated the minimum salary component of the exemption over the duties component.”