Legal Ruling Reverses Key Overtime Protections

A few months ago, I told you about the new rule put into place by the Biden-Harris administration to expand overtime protections for millions of lower-paid salaried employees.

In a significant legal development, a federal court struck down that rule. This decision impacts salary thresholds for overtime eligibility under the Fair Labor Standards Act, which had been set to change dramatically. Here’s where it stands now.

 

Overview of the Rule

The Department of Labor had raised the salary threshold for overtime eligibility to $43,888 annually as of July 1, 2024, with a further increase to $58,656 scheduled for January 2025. The rule also introduced automatic updates every three years and adjustments for highly compensated employees.

 

Court’s Decision

On November 15, 2024, the U.S. District Court for the Eastern District of Texas ruled that the DOL exceeded its authority, stating the salary thresholds overemphasized salary over job duties, violating the FLSA. The decision also invalidated the July 2024 increase, reverting the threshold to $35,568 annually, and struck down the automatic update provision.

 

Implications

Employers must decide whether to maintain payroll adjustments made in compliance with the now-invalidated rule. States with higher thresholds may still enforce their own standards, adding business complexity. The rollback reduces overtime eligibility for many workers.

 

Next Steps

The DOL may appeal, but administrative changes under a future administration could result in a different regulatory approach. Employers and employees should monitor legal developments and state regulations to ensure compliance. The ruling highlights ongoing debates over balancing worker protections with employer needs.

 

Are you concerned about what type of pay to offer to your current staff or new hires? Or do you have other concerns about recruiting associates for your practice? Using the right recruiting service takes out the guesswork when making a hiring decision. My team and I have been in the recruiting industry for more than 30 years and have excelled in finding the right candidates for our clients, resulting in an 88 percent success rate in the first 90 days of recruitment. If you would like to know more about us, I’d be happy to talk with you.