In July 2024, four million new workers were going to become entitled to overtime pay, thanks to the Department of Labor’s (DOL) new overtime rule. But on November 15, 2024, a federal judge blocked the new overtime rule.
The DOL overtime rule, had it not been ruled invalid, would have meant changes to your employees’ classification. For example, employees who were recently considered exempt may have become newly nonexempt.
Now, the July 1 increases to the salary threshold are void. Minimums have reverted to what they were before July 1. Read on for the scoop
What is this all about?
The Fair Labor Standards Act (FLSA) is a federal law that establishes overtime pay eligibility, alongside minimum wage, recordkeeping requirements, and child labor laws.
Employers must follow the FLSA to determine whether employees are exempt from overtime. Overtime is time and a half pay for every hour worked over 40 in a workweek. The FLSA salary threshold is the minimum salary employers must pay employees for them to be exempt from overtime wages.
The Department of Labor administers and enforces the FLSA. As a result, the DOL determines the salary threshold.
Employees are only exempt from overtime pay requirements if they meet all three of the following:
- The employee receives a salary,
- The salary is not less than the FLSA salary threshold, AND
- The employee has executive, administrative, or professional job duties
What was the FLSA 2024 new overtime rule?
On April 23, 2024, the DOL announced its new overtime rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees.”
Beginning July 1, 2024, the new DOL rule would have increased the salary threshold, making millions of previously exempt employees nonexempt from overtime pay.
The new overtime rule was set to increase the FLSA salary threshold to $43,888 annually ($844 per week), up from $35,568 ($684 per week). And on January 1, 2025, there would have been an additional increase to $58,656 annually ($1,128 per week).
The new overtime rule also would have changed the annual compensation requirement for highly compensated employees from $107,432 to $132,964 annually.
This new law would have changed what qualifies as an exempt employee.
The new FLSA rule is void. Here’s what that means
On November 15, 2024, a federal court in Texas ruled that the Department of Labor overstepped its authority. This ruling voided the new overtime rule increase.
Here’s what the new ruling means:
- The July 1, 2024 salary threshold increase to $43,888 annually is void
- There will be no additional increase on January 1, 2025
- There will not be automatic increases that were scheduled to occur every three years
What is the salary threshold now?
The salary threshold reverted to what it was before the July 1 increases. This means the salary threshold is $35,568 annually ($684 per week), NOT $43,888 annually ($844 per week).
Employees who fall under the highly compensated employee exemption must earn $107,432 per year, NOT $132,964.
FLSA overtime rule update: Fast facts
Want the quick scoop on the DOL new overtime rule? We’ve got you covered:
- The DOL new overtime rules that was set to begin on July 1, 2024 is now defunct
- The salary threshold will remain at $35,568 per year ($684 per week)
- There will be no increase at this time, meaning fewer employees are entitled to overtime pay than under the voided 2024 rule
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This article has been updated from its original publication date of May 10, 2024.
This is not intended as legal advice; for more information, please click here.
