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Federal Court Rules Salary Threshold Hike for White Collar Overtime Exemptions Won't Ring in the New Year

On November 15, 2024, a Federal District Court in Texas blocked, nationwide, the U.S. Department of Labor's April 2024 final rule, which sought to increase the salary threshold for white collar exemptions under the Fair Labor Standards Act.

Under the now-quashed DOL rule, 'white collar' employees in administrative, executive, or professional positions would have had to meet progressively higher salary thresholds to maintain their overtime exemption, with the thresholds set to increase every three years.

The first increase, which took effect in July 2024, raised the salary threshold from the 2019 rate of $684 per week ($35,568 annually) to $844 per week ($43,888 annually). A second increase, scheduled for January 1, 2025, would have raised the salary threshold to $1,128 per week ($58,656 annually).

The Federal District Court’s ruling halts the planned January increase and unwinds the July 2024 increase. The court found that the DOL exceeded its authority by setting such high salary requirements, creating a de facto salary-only test for white collar exemptions and ignoring other key criteria like the requirement to perform exempt duties.

The Court also found that the DOL could not implement the proposed three-year renewal increases without following the procedural requirements set forth in the Administrative Procedure Act.

What’s Next?

Tis’ the season for change. With the court's ruling, the July 2024 increase is vacated, and the proposed January increase will not take effect. It remains unclear whether this lower-court decision will stand or be overturned if the Biden Administration even has time to appeal to the U.S. Fifth Circuit Court of Appeals in New Orleans. Moreover, additional changes may be on the horizon as we transition from the Biden to the Trump White House administration.

While it may be tempting to act quickly to rescind pay adjustments resulting from the July 2024 threshold change, employers should consult legal counsel to determine the best course of action.

Federal Court Rules Salary Threshold Hike for White Collar Overtime Exemptions Won't Ring in the New Year

On November 15, 2024, a Federal District Court in Texas blocked, nationwide, the U.S. Department of Labor's April 2024 final rule, which sought to increase the salary threshold for white collar exemptions under the Fair Labor Standards Act.

Under the now-quashed DOL rule, 'white collar' employees in administrative, executive, or professional positions would have had to meet progressively higher salary thresholds to maintain their overtime exemption, with the thresholds set to increase every three years.

The first increase, which took effect in July 2024, raised the salary threshold from the 2019 rate of $684 per week ($35,568 annually) to $844 per week ($43,888 annually). A second increase, scheduled for January 1, 2025, would have raised the salary threshold to $1,128 per week ($58,656 annually).

The Federal District Court’s ruling halts the planned January increase and unwinds the July 2024 increase. The court found that the DOL exceeded its authority by setting such high salary requirements, creating a de facto salary-only test for white collar exemptions and ignoring other key criteria like the requirement to perform exempt duties.

The Court also found that the DOL could not implement the proposed three-year renewal increases without following the procedural requirements set forth in the Administrative Procedure Act.

What’s Next?

Tis’ the season for change. With the court's ruling, the July 2024 increase is vacated, and the proposed January increase will not take effect. It remains unclear whether this lower-court decision will stand or be overturned if the Biden Administration even has time to appeal to the U.S. Fifth Circuit Court of Appeals in New Orleans. Moreover, additional changes may be on the horizon as we transition from the Biden to the Trump White House administration.

While it may be tempting to act quickly to rescind pay adjustments resulting from the July 2024 threshold change, employers should consult legal counsel to determine the best course of action.

Federal Court Rules Salary Threshold Hike for White Collar Overtime Exemptions Won't Ring in the New Year

On November 15, 2024, a Federal District Court in Texas blocked, nationwide, the U.S. Department of Labor's April 2024 final rule, which sought to increase the salary threshold for white collar exemptions under the Fair Labor Standards Act.

Under the now-quashed DOL rule, 'white collar' employees in administrative, executive, or professional positions would have had to meet progressively higher salary thresholds to maintain their overtime exemption, with the thresholds set to increase every three years.

The first increase, which took effect in July 2024, raised the salary threshold from the 2019 rate of $684 per week ($35,568 annually) to $844 per week ($43,888 annually). A second increase, scheduled for January 1, 2025, would have raised the salary threshold to $1,128 per week ($58,656 annually).

The Federal District Court’s ruling halts the planned January increase and unwinds the July 2024 increase. The court found that the DOL exceeded its authority by setting such high salary requirements, creating a de facto salary-only test for white collar exemptions and ignoring other key criteria like the requirement to perform exempt duties.

The Court also found that the DOL could not implement the proposed three-year renewal increases without following the procedural requirements set forth in the Administrative Procedure Act.

What’s Next?

Tis’ the season for change. With the court's ruling, the July 2024 increase is vacated, and the proposed January increase will not take effect. It remains unclear whether this lower-court decision will stand or be overturned if the Biden Administration even has time to appeal to the U.S. Fifth Circuit Court of Appeals in New Orleans. Moreover, additional changes may be on the horizon as we transition from the Biden to the Trump White House administration.

While it may be tempting to act quickly to rescind pay adjustments resulting from the July 2024 threshold change, employers should consult legal counsel to determine the best course of action.

Federal Court Rules Salary Threshold Hike for White Collar Overtime Exemptions Won't Ring in the New Year

On November 15, 2024, a Federal District Court in Texas blocked, nationwide, the U.S. Department of Labor's April 2024 final rule, which sought to increase the salary threshold for white collar exemptions under the Fair Labor Standards Act.

Under the now-quashed DOL rule, 'white collar' employees in administrative, executive, or professional positions would have had to meet progressively higher salary thresholds to maintain their overtime exemption, with the thresholds set to increase every three years.

The first increase, which took effect in July 2024, raised the salary threshold from the 2019 rate of $684 per week ($35,568 annually) to $844 per week ($43,888 annually). A second increase, scheduled for January 1, 2025, would have raised the salary threshold to $1,128 per week ($58,656 annually).

The Federal District Court’s ruling halts the planned January increase and unwinds the July 2024 increase. The court found that the DOL exceeded its authority by setting such high salary requirements, creating a de facto salary-only test for white collar exemptions and ignoring other key criteria like the requirement to perform exempt duties.

The Court also found that the DOL could not implement the proposed three-year renewal increases without following the procedural requirements set forth in the Administrative Procedure Act.

What’s Next?

Tis’ the season for change. With the court's ruling, the July 2024 increase is vacated, and the proposed January increase will not take effect. It remains unclear whether this lower-court decision will stand or be overturned if the Biden Administration even has time to appeal to the U.S. Fifth Circuit Court of Appeals in New Orleans. Moreover, additional changes may be on the horizon as we transition from the Biden to the Trump White House administration.

While it may be tempting to act quickly to rescind pay adjustments resulting from the July 2024 threshold change, employers should consult legal counsel to determine the best course of action.

Federal Court Rules Salary Threshold Hike for White Collar Overtime Exemptions Won't Ring in the New Year

On November 15, 2024, a Federal District Court in Texas blocked, nationwide, the U.S. Department of Labor's April 2024 final rule, which sought to increase the salary threshold for white collar exemptions under the Fair Labor Standards Act.

Under the now-quashed DOL rule, 'white collar' employees in administrative, executive, or professional positions would have had to meet progressively higher salary thresholds to maintain their overtime exemption, with the thresholds set to increase every three years.

The first increase, which took effect in July 2024, raised the salary threshold from the 2019 rate of $684 per week ($35,568 annually) to $844 per week ($43,888 annually). A second increase, scheduled for January 1, 2025, would have raised the salary threshold to $1,128 per week ($58,656 annually).

The Federal District Court’s ruling halts the planned January increase and unwinds the July 2024 increase. The court found that the DOL exceeded its authority by setting such high salary requirements, creating a de facto salary-only test for white collar exemptions and ignoring other key criteria like the requirement to perform exempt duties.

The Court also found that the DOL could not implement the proposed three-year renewal increases without following the procedural requirements set forth in the Administrative Procedure Act.

What’s Next?

Tis’ the season for change. With the court's ruling, the July 2024 increase is vacated, and the proposed January increase will not take effect. It remains unclear whether this lower-court decision will stand or be overturned if the Biden Administration even has time to appeal to the U.S. Fifth Circuit Court of Appeals in New Orleans. Moreover, additional changes may be on the horizon as we transition from the Biden to the Trump White House administration.

While it may be tempting to act quickly to rescind pay adjustments resulting from the July 2024 threshold change, employers should consult legal counsel to determine the best course of action.

Federal Court Rules Salary Threshold Hike for White Collar Overtime Exemptions Won't Ring in the New Year

On November 15, 2024, a Federal District Court in Texas blocked, nationwide, the U.S. Department of Labor's April 2024 final rule, which sought to increase the salary threshold for white collar exemptions under the Fair Labor Standards Act.

Under the now-quashed DOL rule, 'white collar' employees in administrative, executive, or professional positions would have had to meet progressively higher salary thresholds to maintain their overtime exemption, with the thresholds set to increase every three years.

The first increase, which took effect in July 2024, raised the salary threshold from the 2019 rate of $684 per week ($35,568 annually) to $844 per week ($43,888 annually). A second increase, scheduled for January 1, 2025, would have raised the salary threshold to $1,128 per week ($58,656 annually).

The Federal District Court’s ruling halts the planned January increase and unwinds the July 2024 increase. The court found that the DOL exceeded its authority by setting such high salary requirements, creating a de facto salary-only test for white collar exemptions and ignoring other key criteria like the requirement to perform exempt duties.

The Court also found that the DOL could not implement the proposed three-year renewal increases without following the procedural requirements set forth in the Administrative Procedure Act.

What’s Next?

Tis’ the season for change. With the court's ruling, the July 2024 increase is vacated, and the proposed January increase will not take effect. It remains unclear whether this lower-court decision will stand or be overturned if the Biden Administration even has time to appeal to the U.S. Fifth Circuit Court of Appeals in New Orleans. Moreover, additional changes may be on the horizon as we transition from the Biden to the Trump White House administration.

While it may be tempting to act quickly to rescind pay adjustments resulting from the July 2024 threshold change, employers should consult legal counsel to determine the best course of action.