On Nov. 15, 2024, the U.S. District Court for the Eastern District of Texas struck down the overtime pay regulation that the U.S. Department of Labor (DOL) finalized in April 2024. The court invalidated the rule in its entirety, including the increase to the salary threshold that became effective on July 1, 2024.

The rule established by the DOL increased the minimum salary at which executive, administrative and professional (EAP) employees are exempt from minimum wage and overtime pay under the Fair Labor Standards Act (FLSA). 

Under the April 2024 rule, employers were required pay overtime to salaried workers who make less than $43,888 a year in certain executive, administrative and professional roles as of July 1 — and that was set to rise to $58,656 next year.

As a result of the court ruling, the minimum salary threshold reverts back to $35,568 per year for executive, administrative and professional employees to be exempt from overtime pay. The Department of Labor can still appeal this decision but with the impending change of administration, they are unlikely to do so.

The same court invalidated a similar overtime regulation finalized by the Obama administration in 2017. The court said, “The Department simply does not have the authority to effectively displace the duties test with such a predominant salary-level test.” The court wrote that this analysis also applies to the rule’s increase to the highly compensated employee level.

Finally, regarding the automatic increase to the salary level every three years, the court ruled that Congress never authorized the DOL “to use indexing as a means to place on autopilot its obligation to define and delimit the EAP Exemption” and it also “violates the notice-and-comment rulemaking requirements of the Administrative Procedure Act.”