Federal Court Vacates U.S. Overtime Regulation
The U.S. District Court for the Eastern District of Texas has vacated and set aside the U.S. Department of Labor (DOL)’s final overtime regulation. This rule would have increased the salary threshold for the so-called white collar overtime exemption under the Fair Labor Standards Act (FLSA) on a nationwide basis. (To be sure, employers should be aware some states, including Alaska, California, Colorado, Maine, New York, and Washington, have salary thresholds that exceed the FLSA threshold these laws are still in effect.)
The ruling, available at this link, is the result of a lawsuit initiated by a coalition of trade associations that argued DOL exceeded its authority under the FLSA, and that the rule was arbitrary and capricious under the Administrative Procedure Act. The court held that each of the three components of the overtime rule exceeded the DOL’s statutory authority under the FLSA. As a result, the scheduled overtime threshold increase that was scheduled to go into on Jan. 1, 2025 will not take place.
The judge also struck down an increase in the threshold that was implemented on July 1, 2024. Finally, the court said the regulation’s automatic escalator provision, which would have increased the overtime threshold every three years going forward, was also unlawful. As a result of this ruling, the overtime minimum salary threshold will be set back to $35,568 while the minimum salary threshold for highly compensated employees will be $107,432. The court’s opinion was effective immediately.
While the DOL can appeal this decision to the Fifth Circuit Court of Appeals, under the direction of President-elect Donald Trump it is not expected to do so.