A federal judge in the Eastern District of Texas has blocked the Department of Labor’s latest Fair Labor Standards Act (FLSA) overtime rule, invalidating the rule before its planned increase to salary threshold was set to take effect on Jan. 1, 2025. The judge’s decision — that the rule exceeded the DOL’s statutory authority — also invalidated the recent increases in overtime thresholds, which went into effect on July 1, 2024.
Additionally, the court held that the final rule’s automatic “escalator” provision, which would have increased the threshold every three years going forward, was also unlawful.
What does the ruling mean for employers and employees?
The judge’s Nov. 15 ruling has immediate implications for both employers and employees nationwide.
For employers, it means that current overtime regulations for overtime eligibility will remain in place. This can help alleviate potential financial and administrative burdens that would have come with adjusting to the new thresholds. However, the judge’s decision also means that employees who were expecting to become eligible for overtime pay under the new rules will not see those changes.
In terms of numbers, the minimum salary exemption threshold has been reverted back to $684 per week, or $35,558 per year. The highly compensated employee” (HCE) threshold reverts back to $107,432.
What’s next?
The Department of Labor might seek to appeal the lower court’s decision to the Fifth Circuit Court of Appeals. With the upcoming change in presidential administration, it is anticipated that under new leadership, the DOL would likely abandon any appeal and allow the lower court’s decision to stand. Looking ahead, we cannot predict whether the Trump administration will revisit some or all of the rule, repeal it entirely, or adopt a different approach.
In the meantime, if you have any questions about how the ruling might affect you or your employees, please contact your Rehmann advisor. Rehmann will continue to monitor these laws and provide any further updates as news develops.