It took a few months, but in a ruling that should surprise no one, a federal judge in Texas has blocked the U.S. Department of Labor’s new overtime exemption rule that increased the minimum salaries for workers to be considered exempt from overtime pay under the executive, administrative, and professional exemptions. The ruling by Judge Sean D. Jordan of the U.S. District Court for the Eastern District of Texas applies nationwide. Judge Jordan issued a similar ruling in June, blocking the rule from taking effect for employees of the State of Texas. While the Department of Labor can appeal the ruling, the appeal will not be resolved before the new administration takes office in January 2025, meaning that the new rule may be dead at least for the foreseeable future.
So where does this leave employers? The first phase of the new rule went into effect on July 1, 2024, increasing the salary threshold for exempt employees from about $35,568 per year to $43,888 per year. That number was set to increase again on January 1, 2025 to $58,656 per year. By striking the new rule down, this ruling means that the minimum salary threshold reverts to $35,568 ($684 per week).
Few employers who increased minimum salary levels in July 2024 are likely to announce immediate pay cuts. However, employers who planned to increase salaries to meet the $58,656 salary level taking effect in January 2025 may wish to put those plans on hold.