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As we all know, earlier this year, the U.S. Department of Labor instituted a final rule revising the salary test for executive, administrative and professional employee exemptions from overtime. The rule took effect in two steps. The first step took effect on July 1, 2024 when the salary threshold for overtime exemption increased from $684.00 per week to $844.00 per week.
The second step was to take effect on January 1, 2025 when the exemption salary threshold was to increase to $1,128.00 per week (the equivalent of $58,656 per year). The rule also increased the annual salary exemption threshold for highly compensated employees from $107,432 to $132,964.
However, this past Friday, a federal judge in Texas issued an order retroactively stopping the increase in salary thresholds for exempt employees. This order is effective nationwide.
It is unclear if the Department of Labor will appeal this decision to the Fifth Circuit Court of Appeals in New Orleans, which is a conservative court. In addition, with the Trump Administration set to oversee the Department of Labor beginning January 20, 2025, it is likely that any appeal would be withdrawn and the new Republican-led Department of Labor would not press to have salaries increased beyond the $684.00 per week threshold.
As of Friday, the salary exemption threshold has been rolled back from $844.00 per week to $684.00 per week and the highly compensated employee annualized salary has been rolled back to $107,432. However, more news to come. Stay tuned.
