Entirety of Overtime Rule Has Been Invalidated

Friday, November 15, 2024 - The U.S. District Court for the Eastern District of Texas issued its ruling which permanently blocks the Biden Administration rule - invalidating the entirety of the Department of Labor (DOL)’s overtime final rule. In his ruling, Judge Jordan stated that while DOL has the authority to define and delimit the terms of the overtime exemption, “that authority ‘is not unbounded,’” that the ruling improperly bases eligibility for overtime pay on workers' wages rather than their job duties.

U.S. District Judge Sean Jordan explained, "the minimum salary level imposed by the 2024 Rule 'effectively eliminates' consideration of whether an employee performs 'bona fide executive, administrative, or professional capacity’ duties in favor of what amounts to a salary-only test.” He also said that the Department’s automatic updates to the minimum salary threshold every three years "violates the notice-and-comment rulemaking requirements of the [Administrative Procedure Act].”

Jordan, who was appointed by Republican President-elect Donald Trump in his first term, struck down the rule after saying in June that it was probably invalid and temporarily blocking it from being applied to Texas state employees.

The rule would have required employers to pay overtime premiums to salaried workers who earn less than $58,600 per year, when they work more than 40 hours in a week, beginning Jan. 1, 2025, and it had temporarily raised the threshold to about $44,000 per year on July 1.

Because of today’s decision, the minimum salary threshold which increased in July is once again set to $35,568, and the threshold for highly compensated employees is set to $107,432. 

Although DOL may appeal the decision to the 5th Circuit, under the new Administration, DOL will almost certainly abandon its defense of the rule. Over the next four years, it may choose to issue its own rulemaking to update the threshold.