U.S. District Court Overturns Overtime Rule

The latest ruling from the U.S. District Court for the Eastern District of Texas invalidates the entirety of DOL’s overtime final rule. In his decision, Judge Jordan stated that while DOL has the authority to define and delimit the terms of the overtime exemption, “that authority ‘is not unbounded.’” He 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].”

 

In light of this decision, the minimum salary threshold is once again set to $35,568, and the threshold for highly compensated employees is set to $107,432. While the department of labor may appeal the decision to the 5th circuit (yes, the same 5th circuit that created our current E-Rate court headaches), the DOL under the new administration will almost assuredly abandon its defense of the rule. Over the next four years, it may choose to issue its own rulemaking to update the threshold.