Breaking News: Increase to Exempt Salary Threshold Blocked
Originally published on November 18, 2024
A federal judge halted a U.S. Department of Labor (DOL) rule that would significantly increase the salary threshold for overtime exemptions under the Fair Labor Standards Act. The rule raised the threshold from approximately $35,000 to $44,000 in July 2024, with a second increase to around $59,000 expected in January 2025.
The rule included automatic adjustments every three years. The judge ruled that the DOL exceeded its authority, striking down the phase-two increase and the earlier adjustment to $44,000, resetting the threshold to $35,568 annually.
While the DOL may appeal, it is unclear whether the incoming Trump administration will pursue the legal battle. If the appeal is unresolved by January 2025, the administration could revise or abandon the rule altogether.
How Employers Should Respond to the Ruling
Employers must now evaluate how to proceed, especially if they made any changes in anticipation of the now-halted rule. Those who raised salaries or reclassified employees may face challenges in reversing these decisions, risking employee dissatisfaction.
Conversely, employers who delayed the implementation of the January 2025 threshold may need to communicate those delays while monitoring legal developments. For all employers, complying with all federal, state and local wage laws remains critical. While the DOL’s federal exempt threshold increase has been blocked, your state or local area may have regulations that need to be considered when making any decisions.
This ruling serves as a reminder for employers to review exemption statuses to ensure compliance with wage laws. The legal challenge could prompt increased scrutiny from employees and legal advocates, leading to a closer examination of exempt versus non-exempt classifications.
Consult Experts to Maintain Compliance and Morale
Employers should consult trusted HR advisors or legal counsel, particularly when rolling back or pausing changes. These steps are essential for maintaining compliance, communicating effectively with employees and navigating the evolving regulatory landscape while preserving workforce morale and minimizing legal risks.
Partner with James Moore HR Solutions to address these complex employment challenges with confidence. Contact us today for tailored guidance and strategies that support your business and workforce.
