The Trump Administration has signaled it intends to reconsider the previously enjoined 2024 rule that would have increased the minimum salary threshold required for an employee to be exempt from overtime under the Executive, Administrative, and Professional exemption (“Professional Exemption”) and the Highly Compensated Employee exemption (“HCE Exemption”). This rule, issued in the final year of the Biden Administration, would have significantly expanded overtime eligibility for many American workers by raising the salary levels that determine exemption status. Its implementation was closely watched by employers and employees, as it had far-reaching implications for employee pay, staffing, and compliance practices. The future of the rule became uncertain once President Trump took office. Just last week, the U.S. Department of Labor (DOL) requested to pause an appeal it had previously filed, signaling that the DOL may now be rethinking the salary requirements in their entirety. The future of federal overtime regulations remains uncertain.
Background
On April 26, 2024, the DOL, under former President Biden, published a final rule titled Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees. The rule revised the regulations under Section 13(a)(1) of the Fair Labor Standards Act (FLSA), which requires covered employers to pay employees who work overtime at least 1.5 times their regular rate of pay. However, the FLSA exempts certain categories of employees from these overtime requirements. Two of those exempt categories are (1) employees who qualify for the Professional Exemption, and (2) employees who qualify for the HCE Exemption.
The DOL sets the criteria for both exemptions, including a minimum salary threshold. Under the 2019 guidelines, the threshold was $35,568 per year for the Professional Exemption and $107,432 per year for the HCE Exemption.
The 2024 rule aimed to significantly increase those thresholds. Under the revised rule, the salary requirement for the Professional Exemption would have increased to $58,656, and the threshold for the HCE Exemption would have risen to $151,164. Anticipating the change, many employers adjusted employee salaries during the spring of 2024 to comply.
However, on November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the rule. This was a major disruption for employers who had been preparing for compliance with the higher salary thresholds. With the court’s decision, the salary levels reverted to the 2019 standards: $35,568 for the Professional Exemption and $107,432 for the HCE Exemption. Although the DOL appealed the decision, it became unclear whether the appeal would proceed after President Trump took office in January 2025.
Recent Developments
On April 24, 2025, the DOL—now under President Trump—filed an unopposed motion to pause its appeal. The DOL stated:
Due to the recent change in administration on January 20, 2025, there is new Department of Labor leadership. The Department has informed undersigned counsel that it intends to reconsider the rule at issue in this litigation… Abeyance will permit agency leadership time to engage in this decision-making process and will conserve judicial resources.
Texas v. USDOL, Case No. 24-40777, Doc. No. 37.
This motion suggests the DOL may ultimately withdraw the April 2024 rule entirely – or is at least reconsidering its stance. Meanwhile, the DOL continues to defend the rule in separate litigation filed in the District of Columbia: Assoc. of Christian Schools Int’l v. United States DOL, No. 1:24-cv-2618.
Implications
For now, employers should continue complying with the 2019 rules. However, the standards remain in flux, as the litigation continues and policy direction may change. Employers are encouraged to monitor developments closely.
If you have any questions about compliance, please contact your Franczek attorney.