Federal Overtime Salary Threshold Reverts to 2019 Standard Following DOL Appeal Dismissal

By: Scott Atwood, Esq.

The Biden-era 2024 changes to the overtime rules for salaried exempt employees are officially dead. The U.S. Department of Labor (“DOL”) has officially dismissed its appeal of a late-2024 federal court decision that invalidated the Biden administration’s 2024 overtime rule for salaried exempt employees.

As a result, the 2019 overtime exemption rule implemented during the Trump administration remains in effect. The minimum salary threshold for exempt employees under the Fair Labor Standards Act (“FLSA”) is now confirmed at $35,568 annually.

The now-invalidated 2024 rule had increased the salary threshold for exempt employees to $43,888 per year and included additional automatic increases scheduled for future years. Although the federal court ultimately struck down the rule, the initial increase had already taken effect before the ruling was issued.

Consequently, many employers increased the salaries of exempt employees, and most did not revoke those increases even after the lower court’s ruling. Some employers, aware that the DOL had indicated it would not enforce the law until 2025, held off on increases and avoided making salary decisions that were essentially irrevocable.

With the dismissal of the appeal, the legal uncertainty surrounding the 2024 overtime rule has effectively come to an end. Employers should understand that:

• The federal salary threshold for most exempt employees remains $35,568 annually.
• The proposed automatic salary threshold increases under the 2024 rule will not take effect.
• Employers should continue reviewing exempt classifications to ensure compliance with both salary and duties tests under the FLSA.

Bottom Line

This situation stands as a reminder that while employers should remain alert to changes in the law and prepare for upcoming changes, agency rules can change from administration to administration, particularly in areas such as wage and hour law, employee classification, and workplace compliance.

Before implementing substantial policy or compensation changes in response to newly issued regulations, employers should carefully evaluate legal risks and timing considerations with experienced labor and employment counsel. In many cases, newly adopted agency rules become the subject of immediate litigation, delayed enforcement, or reversal by a subsequent administration.

While the Biden-era overtime rule has now been formally abandoned, employers should continue to closely monitor wage and hour developments. Careful planning and legal review remain important when responding to rapidly changing employment regulations.

Employers needing guidance may reach me at scott.atwood@henlaw.com to schedule a consultation.