Nonprofit Resources
Department of Labor Overtime Rule Blocked by U.S. District Court
A federal judge in Texas has overturned the recent changes to the U.S. Department of Labor’s (DOL) overtime rule.
On November 15, 2024, Judge Sean Jordan of the U.S. District Court for the Eastern District of Texas vacated the regulation published by the DOL in April 2024 that:
- Effective July 1, 2024, increased the salary threshold at which executive, administrative, and professional employees are exempt from the minimum wage and overtime rules of the Fair Labor Standards Act from $35,568 per year ($684 per week) to $43,888 per year ($844 per week).
- Effective January 1, 2025, increased the salary threshold to $58,656 per year ($1,128 per week).
- Established a process for reviewing and increasing this threshold every three years.
By vacating the DOL rule, the court has nullified it on a nationwide basis. In the ruling, Judge Jordan effectively concluded that the DOL rule increased the salary threshold element of the test for exempt status to a level that improperly bases eligibility for overtime pay on employees’ wages instead of their job duties. The salary threshold will now revert to the $35,568 per year ($684 per week) level set in 2019.
What’s Next?
The DOL could elect to appeal the trial court’s decision to the U.S. Fifth Circuit Court of Appeals. While it is difficult to predict with certainty how the Fifth Circuit would rule, the appellate court’s prior decisions in this area would seem to indicate that the court would be unlikely to overturn the trial court’s decision.
Moreover, were the Fifth Circuit to hear the case and rule in either direction, it seems likely the U.S. Supreme Court, given its current makeup, would be inclined to affirm the trial court’s decision.
Finally, it seems likely that a Trump Administration DOL would not pursue any appeal effort. Accordingly, whatever further legal maneuverings may take place, it is likely the trial court’s decision will stand.
Assuming the court’s decision to vacate the DOL rule is not stayed (i.e., temporarily put on hold) pending an appeal, organizations are no longer required to comply with the January 1, 2025, salary threshold increase.
Further, by vacating the rule, the court also rendered the July 1, 2024, salary threshold increase invalid. This means that there would be no legal impediment to rollback salary increases put in place to comply with the July 1 threshold. However, any such move would need to comply with any state law regulations regarding compensation changes and address the impact on employee morale.
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