UPDATE: Texas Court Ruling Reverses Department of Labor’s Salary Rule Changes
On November 15, 2024, a federal court in Texas made a notable ruling that eliminated the Department of Labor’s recent changes to the minimum salary thresholds for exempt employes. The court determined that the DOL had overstepped its authority, striking down the July 1, 2024 increases and blocking the planned hike for January 1, 2025. Additionally, the automatic increases that were scheduled for every three years will not go into effect.
Because of this new ruling, the minimum salary requirements for most executive, administrative, and professional employees will go back to previous levels. As a result, these employees must now be paid $684/week or $35,568 annually, instead of the prior ruling’s $855 weekly or $43,888 annually. Employes under the highly compensated exemption must earn at least $107,432 every year, rather than the $132,964 required by the 2024 rule.
What does this mean for employers and employees? Employers who have already adjusted their salaries or classifications in response to this now-defunct rule can roll back these changes. However, after altering an employee’s pay or classification, they cannot retroactively change things. Employers should communicate any changes to their employees before they take effect and adhere to all state and local requirements.
Employers should also consider the impact of this reversal on the morale of their employees. Providing context and clarity on the legal changes and the company’s business needs can help employees understand the reason behind the adjustments and mitigate any potential negative feelings.
In a new ruling, the U.S. Labor Department recently announced that millions of employees in America will now become eligible for overtime pay. Starting July 1, 2024, any salaried worker who earns less than $43,388 annually will qualify for 1.5 times their pay if they put in more than a 40-hour workweek. This is an increase from the current threshold of $35,568 every year.
This new ruling marks the biggest change to the overtime pay threshold in several decades. And next year, this threshold will expand again. As of January 1, 2025, any salaried workers who make less than $58,656 will be eligible for overtime pay at 1.5 times their normal rate if they exceed 40 hours worked in a week.
The main workers who will benefit from this new ruling are those who work in low-wage positions that are still salaried. Many of these employees include those working in healthcare, finance, hospitality, and retail. In fact, an analysis of this updated rule by the Economic Policy Institute discovered that, thanks to this new ruling, over 4.3 million more workers will become eligible for overtime pay.
The Labor Department has plans to update the thresholds for overtime eligibility every three years from this point out, using current wage data. At Balanced Bookkeeping of NC, we recognize that this overtime ruling could impact the wages you pay your employees and your payroll operations. To learn more about how this ruling could affect your business and find out how you can navigate this change successfully, contact us today.
