Overtime Rule Declared Invalid

On Friday, November 15, 2024, a federal judge in Texas ruled that the Department of Labor’s 2024 overtime rule is invalid.  The Department of Labor (DOL) released the rule earlier this year that attempted to implement a new overtime regulation and salary threshold increase.  The rule would have required employers to pay overtime premiums to salaried workers who earn less than $1,128 per week, or about $58,600 per year, when they work more than 40 hours in a week, beginning January 1, 2025, and it had already temporarily raised the threshold to approximately $44,000 per year on July 1st.

U.S. District Judge Sean Jordan determined that the DOL exceeded its authority by using salary alone to determine overtime eligibility, which bypassed the required “duties test” under the Fair Labor Standards Act (FLSA). The judge also ruled that the DOL’s plan to automatically increase the salary threshold every three years violated the legal process. As a result, the court has restored the previous 2019 salary threshold of $35,568.  In light of this decision, businesses should return to the previous salary threshold of $35,568 annually, effective immediately. While the DOL has the option to appeal the ruling, it is possible that DOL may not pursue further legal action under the new incoming Trump administration.  If the DOL chooses to propose a new rulemaking to adjust the salary threshold in the future, the process will likely involve further public input and legal review. We will continue to monitor the situation and keep you informed of any updates to this ruling that may impact overtime eligibility.

Click here to read more about this in an article from SESCO Management Consultants.