Lorna Geiler Labor Law E-Bulletin: Department of Labor Overtime Rule Struck Down

As you may have heard, a Texas court recently struck down the United States Department of Labor’s overtime exemption rule increasing the minimum salary thresholds for exempt status employees. The rule, first published in April of this year, increased the minimum salary for exempt status for the executive, administrative and professional exemption from $35,568 per year to $43,888 per year, effective this past July, with a second increase up to $58,656 per year on January 1, 2025. The rule also increased the minimum compensation for the “highly compensated” employee to $151,164 by January 1, 2025. The November 15 Order, entered by Judge Sean Jordan, struck the entire rule, including the increase that took effect in July 2024.

Judge Jordan’s rationale confirmed that job duties, not salaries, are what makes an individual exempt under the executive, administrative and professional classifications. The Judge found that by increasing the minimum salary so significantly that the Department of Labor actually exceeded its authority to “define” and “delimit” the executive, administrative and professional exemptions.

While this is a final order, as opposed to a temporary or preliminary injunction, there is the opportunity for appeal by the United States Department of Labor. It is not at all clear what the Trump Administration will do with respect to any appeal in this matter. It was in 2019, during the first Trump Administration, that the minimum salary for exemption was increased from $23,660 to the pre-July 1, 2024 $35,568. If the Department of Labor chooses not to appeal Judge Jordan’s ruling, there will be no further Department of Labor increases from the Biden Administration’s rule making and the minimum salary threshold reverts back to $35,568 and $107,432 per year.

If you have questions, please contact Attorney Lorna K. Geiler.