A Nov. 15 federal court decision spared HR professionals from having to comply with an increase in the salary threshold for white-collar exemptions from overtime, a threshold that had been set to rise to $58,656 annually as of Jan. 1, 2025. The July 1, 2024, increase of the salary threshold from $35,568 to $43,880 per year was also struck down.
That means the salary threshold for white-collar exemptions is effectively back to the 2019 overtime level of $35,568 annually ($684 per week), said Chuck McDonald, an attorney with Ogletree Deakins in Greenville, S.C.
The U.S. District Court for the Eastern District of Texas vacated the Biden administration’s overtime rule. In its ruling, which applies nationwide, the court criticized the rule’s rise in the salary threshold level as displacing the duties test for white-collar exemptions by being too steep.
In addition, the court struck down the automatic increases in the salary threshold every three years that the rule had set in place, finding that they violated the notice-and-comment period requirements of the Administrative Procedure Act.
The court concluded that the 2024 rule was not based on a permissible construction. Like the 2016 rule’s attempt to dramatically increase the minimum salary level from the 20th to the 40th percentile of full-time, salaried workers in the South, the 2024 rule mandated raising the minimum salary level for white-collar exemptions from the 20th to the 35th percentile—...
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