The U.S. Department of Labor (DOL) has officially removed the now-invalidated 2024 federal overtime rule and restored the Fair Labor Standards Act (FLSA) exemption regulations to their prior form.
The 2024 rule would have significantly increased the minimum salary required for employees to qualify for the executive, administrative, and professional (EAP) exemptions. The rule was scheduled to raise the salary threshold from $684 per week to $844 per week in July 2024 and then to $1,128 per week in January 2025, with automatic increases every three years thereafter. It also would have substantially increased the compensation requirement for the Highly Compensated Employee (HCE) exemption.
However, a federal court in Texas struck down the rule in November 2024, finding that the DOL exceeded its authority by placing too much emphasis on salary levels rather than an employee’s job duties when determining exempt status.
The DOL’s latest action simply removes the invalidated rule from the federal regulations and formally reinstates the standards established under the 2019 rule.
What Employers Need to Know
For now, the federal salary thresholds remain:
• $684 per week for most executive, administrative, and professional exempt employees
• $107,432 annually for the Highly Compensated Employee (HCE) exemption
Employers should remember that meeting the salary threshold alone does not create an exemption. Employees must also satisfy the applicable duties tests under federal law.
Forework Takeaway
While the federal exemption salary threshold remains unchanged, employers must take into account State-specific salary thresholds, including New York and California, which impose higher salary requirements and additional exemption standards under State law. And, those levels are not stagnant.
Now is a good time to review employee classifications, confirm compliance with applicable state requirements, and ensure exempt employees satisfy both the salary and duties tests.