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Final Ruling on Overtime Rule—No Salary Threshold Increase

In a long awaited ruling, a federal judge in Texas has struck down the federal overtime rule that would have nearly doubled the salary threshold for exempt employees. The district court’s final judgment puts the overtime rule at rest, which means there is no increase to the salary threshold at this time.

In November 2016, a federal judge in Texas halted the Department of Labor’s (DOL’s) new federal overtime rule, which would have almost doubled the Fair Labor Standards Act’s (FLSA’s) salary threshold from $23,660 to $47,476. Now, nearly a year later, a federal judge has invalidated the overtime rule due to the fact that the DOL doesn’t have the authority to raise the salary threshold so high that it actually eliminates the duties test. In addition, the provision that would have provided for automatic adjustments to the threshold every three years was found to be unlawful.

The criteria to qualify as an exempt employee under the FLSA’s “White Collar” exemption (executive, administrative, and professional) will remain the same as it has been for many years, as noted below.

  • The employee must be paid on a salary basis,
  • The annual salary must be at least $23,660 (salary threshold), and
  • The employee must perform certain duties (duties test) to qualify for the exemption.

The DOL, under President Donald Trump’s administration, could appeal the latest court ruling; however, it doesn’t seem likely. What will happen with the overtime rules in the future remains unclear. For now, the DOL has issued a Request For Information (RFI) to gather more information from the public prior to deciding the next steps towards possible changes to the existing overtime rules.

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