New England Biz Law Update
The U.S. Department of Labor has formally rescinded the Biden administration’s overtime rule that would have significantly increased the salary thresholds for white-collar overtime exemptions under the Fair Labor Standards Act.
The now-rescinded rule, finalized in 2024, would have raised the minimum salary threshold for executive, administrative and professional exemptions in multiple stages, with automatic updates tied to future wage data.
The rule faced immediate legal challenges and was ultimately blocked nationwide by a federal court before full implementation.
By formally withdrawing the regulation, the Department has reinstated the 2019 overtime framework, under which most exempt employees must be paid at least $684 per week, or $35,568 annually, in order to qualify for white-collar overtime exemptions.
The highly compensated employee threshold also remains at the levels established under the 2019 rule.
Rescission ends uncertainty
The Biden-era rule would have increased the standard salary threshold to approximately $58,000 annually through phased increases and automatic adjustment mechanisms.
Employer groups had argued that the rule exceeded the Department’s authority and would impose significant labor and compliance costs, particularly on smaller employers and nonprofits.
The rescission formally ends ongoing uncertainty surrounding whether the blocked salary increases could later be revived or enforced through continued litigation.
Although the salary thresholds remain unchanged, employers must still satisfy the duties tests applicable to executive, administrative and professional employees in order to maintain exempt classifications under the FLSA.
The DOL’s action does not alter those duties requirements or other wage-and-hour obligations under federal or state law.
In addition, some states impose higher salary thresholds or stricter exemption standards than federal law.
Review of employee classification practices
The development provides employers with greater short-term clarity regarding federal overtime exemption thresholds.
However, employers should continue reviewing exempt classifications to ensure employees satisfy both salary and duties requirements and that payroll practices comply with applicable federal and state law.
Multi-state employers should also remain attentive to differing state overtime rules and salary thresholds, particularly in jurisdictions that impose standards exceeding federal requirements.
