2024 salary rule for overtime compensation vacated

On November 15, 2024, a U.S. District Court for the Eastern District of Texas vacated and set aside nationwide the rule raising salary thresholds for overtime exemptions. For an employee to be exempt from overtime pay, the employee needs to not only meet the requirements for executive, administrative, or professional employee duties but must also be paid a pre-determined and fixed salary that is not subject to reduction based on the quality or quantity of work and the salary must meet a minimum specified amount. That minimum amount increased in 2024 to $43,888 and was set to increase again in January of 2025 to $58,656 a year minimum salary. The court found that the salary thresholds set by the 2024 rule effectively eliminated the consideration of the employee’s duties and this exceeded the Department of Labor’s authority. Given the nationwide effect of the rule, the court found striking down the rule warranted. Now, the pre-2024 minimum applies again: a salary of $35,568 a year. You will want to consult your city attorney before you consider reducing salaries if you increased salaries due to the 2024 increase.