2024 FLSA Overtime Rule Halted
By Kathryn O'Connor, PHR, SHRM-CP, CCP, GRP, Director, Compensation Services
Published November 18, 2024
A federal court in Texas has struck down the 2024 U.S. Department of Labor (DOL) rule intended to significantly raise the salary threshold used by the Fair Labor Standards Act (FLSA). This ruling has significant implications for employers in terms of employee classification and compensation.
Background on the 2024 Rule
In 2024, the DOL updated its overtime regulations raising the minimum salary threshold for employees to qualify as exempt under the FLSA. The 2024 rule included a phased, two-step plan. First, the salary threshold would increase to $844 per week on July 1, 2024. Then, the salary threshold would increase again on January 1, 2025, to $1,128 per week.
This change was part of a broader effort by the DOL to make more workers eligible for overtime pay by tying the salary threshold to economic conditions and the cost of living.
However, the rule was immediately challenged in court by several business groups. On Friday, November 15, 2024, the U.S. District Court for the Eastern District of Texas issued a ruling striking down the updated salary threshold and effectively halting the implementation of the 2024 changes.
What the Ruling Means
The court's decision means the updated 2024 FLSA rule will not go into effect. As such, the salary threshold of $844 per week that employers have been using since July 1, 2024, is no longer valid. The pre-2024 salary threshold of $684 per week ($35,568 annually) remains in place.
What’s Next
While this court ruling provides a degree of certainty for now, the DOL may seek to revise the rule or appeal the decision, and Congress may take steps to address the issue legislatively. Further, the ruling raises many questions about the long-term trajectory of FLSA regulations and whether the DOL will reintroduce a new salary threshold under the Trump administration.
HR Source Support
As always, HR Source is here to help. We have updated our Field Guide to Employee Classification to incorporate the pre-2024 salary threshold of $684 per week.
Secondly, we hope you can join us on December 5th at our FLSA & Pay Transparency webinar where we’ll discuss these FLSA changes as well as the new 2025 Illinois Pay Transparency Act.
Finally, we encourage you to stay abreast of future news and FLSA developments. Certainly, there will be more to come on this important topic and HR Source will continue to share updates.
Members with questions can contact us through the HR Hotline Online or at 800-448-4584.