Court Strikes Down DOL Overtime Rule

Stop me if you've heard this one! It's just before Thanksgiving, we just had a presidential election (in which Donald Trump got elected), and a new regulation increasing the minimum salary threshold for the white collar overtime exemptions is about to go into effect, when . . . a court strikes the rule down in its entirety nationwide. Yes, that happened in 2016 to the Obama DOL overtime rule. Guess what? It just happened again to the Biden DOL overtime rule. 

Long story short: Certain white collar salaried employees are exempt from the FLSA's overtime requirements (i.e. they do not get paid time and a half for hours over 40 worked in a workweek). To qualify for the exemption the employee's must receive a salary in excess of a minimum salary threshold. It was $684 per week under a Trump administration rule. The Biden administration's rule increased the minimum to $844/week on July 1, 2024 and was scheduled to increase to $1,128/week on January 1, 2025. 

Not official use. 

The new rule would also have increased the minimum for the Highly Compensated Employee (HCE) exemptions ($132,964 on July 1, 2024, and $151,164 on January 1, 2025). The new rule included other more minor changes (future automatic increases, counting nondiscretionary bonuses, catchup payments, etc.).

On Friday, a federal court in Texas struck down the whole rule (opinion via Bloomberg Law). 

Just tell me what this means!

The entire rule has been vacated. Yes, even the part that already went into effect in July. So, we're back to $684/week as the minimum salary threshold for the white collar exemptions. 

Caveat: We may see an appeal, and we don't know how an appeals court will rule. We also don't know how the incoming Trump administration will handle those appeals (and/or whether it will propose a new rule of its own or repeal the Biden Rule).