FLSA Overtime Rule Has Been Updated – Significant Changes

Note that the FLSA Salary Threshold Changes Have Been Struck Down!

On April 23, 2024, the U.S. Department of Labor announced an updated, final rule for overtime pay under the Fair Labor Standards Act (FLSA). Changes to minimum salary threshold are scheduled to go into effect in a series of stages, with the first change effective July 1, 2024, then January 1, 2025, then every 3 years after.

The Ruling

A federal judge in Texas ruled on Friday, November 15, to strike down the 2024 increases to the Fair Labor Standards Act (FLSA) salary threshold. The salary threshold changes, set to take effect on July 1, 2024, and January 1, 2025, along with automatic updates, were deemed unlawful by the U.S. District Court for the Eastern District of Texas and are now immediately voided.

What does this all mean?

This means employers are not required to raise the salary of exempt employees to maintain their exemption status.

The July 1, 2024, salary threshold of $844 is no longer in effect. The court’s reversal reinstates the weekly salary threshold at $684, or $35,568 annually for a full-time worker. Additionally, the annual compensation requirement for highly compensated employees is reset to $107,432.

Next Steps

Employers who adjusted employee pay in July should maintain those increases. Employers may also reclassify any employee previously shifted to nonexempt status back to exempt status. However, it’s important to consider the potential impact of making this change mid-year. If reclassification is necessary, it might be best to implement it at the start of a new work year.

Need help?

CSS is here to partner in all your HR efforts, including determining pay classification status of your employees and implementing action plans to maintain compliance with the ever-changing DOL rules. Contact Jordan Elliott, COO for more information.