The Biden administration’s decision to increase the salary threshold for overtime pay was struck down Friday, Nov. 15, 2024, by a federal judge in Texas.
The Biden rule, which went into effect in July 2024, increased the minimum salary for most salaried workers from $684 to $844 per week, and for highly-compensated individuals from $107,432 annually to $132,964. The Biden rule also would have automatically implemented another increase in January and every three years after that.
Judge Sean Jordan, Eastern District of Texas, said the U.S. Department of Labor exceeded its authority in setting the new salary levels.
Businesses opposing the new rule had argued that workers who performed the duties of exempt employees should be considered exempt regardless of salary levels and that the salary threshold had illegally replaced the examination of each employee’s actual duties in determining whether workers were overtime-eligible.
Jordan agreed. He sent the question of setting any salary standard back to the Labor Department for more work and rolled back the July increase. He also struck down the automatic triennial increase, saying the Labor Department had tried to put its work on autopilot in violation of the Fair Labor Standards Act.
The decision could be appealed to a federal circuit court. But with a new Trump administration about to take over on Jan. 20, 2025, any appellate action could be short-circuited by a new Labor Secretary. When Trump took office in 2016, he rolled back a similar increase in exempt salaries by the Obama administration.
Under Fair Labor Standards Act rules, employees classified as professional, executive or administrative who are paid set salaries and who meet certain duties tests are not eligible for overtime pay. The Labor Department also has implemented a salary minimum for separating the overtime-eligible workforce from other workers. That salary minimum is now in question under Jordan’s ruling. At the least, the old threshold of $684/week for exempt employees is back in effect for now.
Employers now face the question of what to do with employees who received an increase to $844/week in July. Before rolling back those increases, employers should check state and local laws to be sure they will be in compliance.
NNA Chair Martha Diaz Azkenazy, publisher, San Fernando (California) Valley Sun, said NNA welcomed a new look at fair implementation of the Fair Labor Standards Act.
“State law controls this question for many of our members,” she said. “But NNA has long argued to the Labor Department that newspaper employees—particularly journalists—are professionals and should be treated as such. Classifying them as professionals gives the newspaper as well as the employees flexibility to set schedules that are pragmatic and helpful for our busy lives and that enable us to cover the news.”
To view the decision click here, courtesy of Bloomberg Law.
