In April 2024, under the Biden administration, the Department of Labor issued a rule which increased the salary threshold for executive, administrative, and professional employees to qualify for the exemption under the Fair Labor Standards Act. Prior to the implementation of the Rule, such employees who earned more than $43,888 (prior dollar figure $34,568) per year would not qualify for overtime pay. Also, highly compensated employees who earned more than $132,964 would not qualify for overtime pay. The Rule also provided that the highly compensated cut off would increase to $151,164 on January 1, 2025. This Rule was effective in July, 2024. In layman’s terms, by increasing the threshold, more employees would become eligible for overtime pay.
In a decision rendered by the U.S. District Court for the Eastern District of Texas on November 15, 2024, the above DOL Rule was reversed, and the former threshold was reinstated. The Court held that the DOL does not have the power or authority to schedule automatic threshold levels. Instead, it must engage in a formal rulemaking process to implement any increase. This decision, however, does not implicate any state laws which may be more restrictive.
Should you have any questions on overtime issues, please contact Alan Blanco at 412-327-5038.