A new Labor Department rule attempted to make more employees eligible for overtime pay, but was halted by a federal judge. Under the rule, salaried workers who earn less than $59,000 a year must be compensated fairly for overtime work. Overtime pay of 150% of regular pay is not required to be paid to workers in certain capacities who make over a certain minimum. Those exceptions include executive, administrative, or professional capacities. To avoid paying the overtime, the employer must show that the worker qualifies in one of those exceptions and is paid over the designated minimum. During the Trump administration, the salary threshold was $35,568, above which employees do not have full protection. On July 1, 2024, the threshold increased to $43,888, and on January 1, 2025, it will rise to $58,656. The change could affect 4 million workers. As with the FTC non-compete rule, this rule was promptly challenged in court.
Well, never mind!
UPDATE: Within a few weeks of my initial blog posting, the rules changed yet again. This is typical for the modern regulatory environment, where every rule is challenged in court.
The DOL’s new overtime regulations were scheduled to go into effect on January 1, 2025. However, on November 15, 2024, a judge from the US District Court for the E.D. Tex invalidated it entirely.
With the court’s ruling, the number remains at the previous $35,568. There has been, and remains, an exemption for highly compensated employees making over $107,432, meaning those making that much need not be paid overtime. In between, whether employees are entitled to overtime depends on an assessment of factors relating to their job duties,
Given the recent election, it is likely that the DOL will not pursue an appeal. In any event, the injunction is likely to be in place for a significant period of time.
If you aren’t sure whether employees are entitled to overtime, seek legal counsel. The penalties for not paying an employee overtime he or she is entitled to are severe, and can reach back for years.
Peter Juran brings over 30 years of litigation experience, having tried cases to verdict before juries, judges, and arbitrators. He advises clients on employment law, construction disputes, intellectual property, real estate, corporate governance, and trust and estate matters. Certified as a mediator, Peter also conducts Superior Court Mediated Settlement Conferences. Known for his strategic approach, he helps clients navigate complex disputes, whether through negotiation or litigation, to achieve the best possible outcomes.