Court Overturns Salary Threshold Increase for White Collar Overtime Exemptions

On November 15, 2024, a federal court struck down the Department of Labor (DOL) rule that raised the salary threshold for executive, administrative, and professional employees to be exempt from minimum wage and overtime pay under the Fair Labor Standards Act (FLSA). This nationwide ruling affects all businesses and nullifies:

• The July 1, 2024, increase from $684 per week to $844 per week.
• The January 1, 2025, planned increase to $1,128 per week.
• Future automatic increases every three years starting July 1, 2027.

What should employers do?

• Salary Adjustments: Employers who raised salaries to meet the July 1 threshold or in anticipation of the January 1 increase may revert to previous pay rates but should consider employee morale.
• Reclassification: Workers reclassified as nonexempt under the 2024 rule may be switched back to exempt if they meet the duties test, with advance notice where required.

This ruling offers a chance to review employee classifications and job duties. Yeo & Yeo’s HR Advisory and Payroll Solutions Groups can help you navigate these changes. Contact us.