On April 23, 2024, the U.S. Department of Labor (“DOL”) issued its Overtime Pay Final Rule (“Final Rule”) which, on July 1, 2024, increased the minimum annual salary threshold to $43,888 under the Fair Labor Standards Act (“FLSA”) required for exempting eligible “white collar” employees from minimum wage and overtime payments. The Final Rule also set a further increase to $58,656 as of January 1, 2025.
However, on November 15, 2024, after the State of Texas and a coalition of U.S. business groups (collectively “Plaintiffs”) filed suits to enjoin the DOL from implementing its Final Rule, U.S. District Judge Sean Jordan issued a 62 page decision permanently vacating the Final Rule, holding that DOL improperly relied too heavily on wages rather than job duties when determining eligibility for overtime pay.
As a result of Judge Jordan’s decision, the federal threshold reverts to the threshold set in 2019 which is $35,500. However, if an employer’s applicable state law provides for a higher minimum threshold than federal law, then the employer must follow the state law. As an example, both Maine and New York now have higher minimum salary thresholds under state law.
While the DOL has the option to appeal, the path forward leads to the 5th Circuit Court of Appeals which is notorious for being the most conservative federal court of appeals, a reputation that does not bode well for a reversal. Additionally, once the new administration assumes power it is unlikely they will attempt to pursue any appeal or otherwise engage in an effort to revive the Final Rule. We will continue to monitor this issue and provide any updates if and when they arise.
For more information regarding the Final Rule or questions about other labor and employment law matters, please contact:
Peter Bennett (pbennett@thebennettlawfirm.
Rick Finberg (rfinberg@thebennettlawfirm.