In 2024, the U.S. Department of Labor adopted a rule that would have increased the salary thresholds used for certain white-collar exemptions from the Fair Labor Standards Act. Federal litigation later blocked the rule, leaving the prior federal salary threshold in effect. The episode is an important reminder that overtime eligibility depends on both current law and the employee's actual job duties.
What the 2024 Rule Attempted to Change
The rule increased the salary level required for the executive, administrative, and professional exemptions in stages and included a mechanism for future updates. Employers nationwide reviewed classifications and compensation in anticipation of the increases.
Federal Courts Set the Rule Aside
Federal courts in Texas rejected the Department's rule, preventing the scheduled increases from becoming the controlling nationwide standard. As reflected on the current Fidlon Legal site, employers and employees should continue using the federal threshold that remained in effect after those rulings unless and until governing law changes.
Salary Is Only Part of the Exemption
Even when an employee earns more than the minimum salary level, the employee must still satisfy the duties requirements of an applicable exemption. A salary and a managerial-sounding title do not by themselves eliminate overtime rights.
Executive Employees
The executive exemption generally requires management as a primary duty, supervision of at least two full-time employees or their equivalent, and meaningful authority or influence over personnel decisions.
Administrative Employees
The administrative exemption generally requires qualifying non-manual work related to management or general business operations and discretion and independent judgment on matters of significance.
Professional Employees
The learned-professional exemption generally requires work involving advanced knowledge in a field of science or learning customarily acquired through prolonged specialized instruction.
Why Employers Should Recheck Classifications
The litigation over salary thresholds does not eliminate exposure from a duties-test misclassification. Employers should periodically compare written job descriptions with actual duties, review how managers spend their time, and confirm that payroll practices include all compensation required in the regular rate.
Why Employees Should Look Beyond Their Pay Stub
An employee who is salaried and works more than 40 hours should not assume that overtime is unavailable. The correct analysis requires the pay structure, actual duties, authority, discretion, and the specific exemption relied upon by the employer.
See Overtime Eligibility and Misclassification Issues for more information.