New England Biz Law Update
The U.S. Department of Labor (DOL) has appealed a Texas federal court’s decision that invalidated its 2024 overtime rule, setting the stage for a review by the 5th U.S. Circuit Court of Appeals.
The 2024 overtime rule aimed to expand overtime eligibility by increasing the salary threshold for exempt employees. Specifically, it sought to raise the minimum salary required for exemptions under the Fair Labor Standards Act (FLSA) from $684 per week to $884 per week as of July 1, 2024, with a further increase to $1,128 per week scheduled for January 1, 2025.
However, in November 2024, the U.S. District Court for the Eastern District of Texas struck down the rule nationwide, asserting that the DOL had overstepped its authority by emphasizing salary levels over job duties in determining overtime eligibility.
The DOL’s appeal to the 5th Circuit seeks to reinstate the 2024 rule, defending its authority to set salary thresholds for overtime exemptions. This appeal follows a prior 5th Circuit decision in Mayfield v. U.S. Department of Labor, where the court upheld the DOL’s power to establish a minimum salary for exemptions but cautioned against setting thresholds that could overshadow job duties as the primary factor for exemption.
Takeaways for employers
The 2024 overtime rule remains invalidated pending the court’s review. Employers should continue to follow the previous salary threshold of $684 per week for exempt employees.
If the 5th Circuit overturns the lower court’s decision, the increased salary thresholds could be reinstated, expanding overtime eligibility to more employees.
Employers should monitor the appellate proceedings and assess the potential impact of the 2024 rule’s reinstatement on their workforce and payroll practices.
The forthcoming decision will be pivotal in determining the DOL’s authority to set salary-based criteria for overtime exemptions and will have significant implications for employers nationwide.
