A recent ruling by the U.S. District Court for the Eastern District of Texas has vacated the U.S. Department of Labor’s (DOL) rule that sought to increase the salary threshold for the "white-collar" overtime exemption under the Fair Labor Standards Act (FLSA). This ruling means that the planned increase to the salary threshold, set to take effect on January 1, 2025, will not go forward. Additionally, the court also invalidated the salary increase that was set for July 1, 2024.

The court determined that the DOL exceeded its authority by setting salary levels that effectively created a “salary-only” test for exemptions, rather than focusing on the duties performed by employees. It also ruled that the DOL's plan to automatically increase the salary threshold every three years was unlawful. As a result, the court struck down the rule on a nationwide basis.

Key points:

• The January 2025 salary increase is now blocked.
• The July 2024 increase has also been nullified.
• Employers who previously adjusted employee salaries or exemption statuses based on the now-invalidated increases should consult with legal counsel before reversing those changes.
• Some states, such as California and New York, have their own salary thresholds that may still apply.

Employers should continue to monitor this issue, as the DOL may appeal the decision. However, with changes in leadership at the DOL, the current administration may allow the ruling to stand.