In a case closely watched by the business community, a federal judge recently struck down a Biden administration rule that raised the salary threshold for the “white-collar” overtime exemption, saying the U.S. Department of Labor had exceeded its authority.

The Nov. 15 decision vacates the DOL’s rule nationwide, including the $43,858 salary threshold that took effect on July 1, 2024. The ruling also blocks a second increase set for Jan. 1, 2025, which would have raised the white-collar exemption threshold to $58,656, as well as the automatic threshold increases that would have been made every three years.

Had that $58,656 threshold for the Fair Labor Standards Act’s (FLSA) white-collar overtime exemption been allowed to take effect Jan. 1, an estimated 4 million additional executive, administrative and professional workers would have had to be paid overtime if they worked more than 40 hours per week.

As a result of the court’s ruling, the overtime salary threshold now reverts to the $35,558 standard that was in effect in 2019 during the first Trump administration. While the Biden administration could appeal, it is considered unlikely that president-elect Donald Trump’s administration would continue the court case after he takes office on Jan. 20.

“With the upcoming change in presidential administration, we predict that under new leadership the DOL would likely abandon any appeal and allow the lower court’s decision to stand,” wrote Littler Mendelson attorneys who...

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