Honestly, if you’ve been feeling like the ground is shifting under your feet regarding payroll, you aren't alone. One minute, millions of workers are looking at a massive expansion of overtime eligibility, and the next, a single court ruling wipes it all off the map.
It happened fast.
On November 15, 2024, Judge Sean Jordan of the U.S. District Court for the Eastern District of Texas officially tossed out the Biden administration’s ambitious plan to overhaul who gets paid for extra hours. This wasn't just a minor tweak or a delay. The court basically took a sledgehammer to the entire 2024 Department of Labor (DOL) rule.
The Overtime Pay Rule Struck Down: Why It Happened
The core of the legal fight wasn't about whether people deserve more money. It was about authority. The DOL has the power to "define and delimit" what makes someone a "white-collar" professional (think managers, admins, and executives). Since the late 1930s, they've used a two-part test: what you do (the duties test) and what you’re paid (the salary test).
Judge Jordan ruled that the new thresholds were so high they basically made the "duties" part of the test irrelevant. In his 62-page decision, he argued that if a salary floor is so high that it disqualifies a third of the people who actually perform managerial duties, the DOL is no longer "defining" the exemption—they're replacing it.
Basically, the court said the DOL overstepped its bounds. By making salary the "predominant" factor, they weren't following the law as Congress wrote it.
What was supposed to happen?
Before the ruling, we were looking at a staggered rollout that would have changed the lives of roughly 4 million workers.
- July 1, 2024: The salary floor already jumped from $35,568 to $43,888.
- January 1, 2025: It was scheduled to skyrocket to $58,656.
- The "Autopilot" Clause: The rule included a mechanism to automatically hike these numbers every three years without needing a new public comment period.
The court didn't just stop the January hike. It retroactively invalidated the July increase, too.
The Immediate Impact on Your Paycheck
So, where does that leave us right now? We are officially back to the 2019 levels set during the Trump administration.
The current federal salary threshold for overtime exemption is $35,568 per year ($684 per week).
If you are a "highly compensated employee" (HCE), that threshold has also reverted to $107,432 instead of the planned jump to over $151,000.
For the person sitting in a middle-management role making $50,000 a year, this is a bit of a gut punch. On paper, you were about to become eligible for "time-and-a-half" pay for every hour worked over 40. Now? You’re likely back to being "exempt," meaning those 50-hour weeks don't come with a bigger check.
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What Employers Are Doing Right Now (It’s Messy)
Business owners are in a weird spot. Some companies already gave raises in July to keep their managers exempt. Can they take that money back?
Legally, in most states, yes—as long as it’s done prospectively (meaning you can’t take back money already earned, but you can lower future pay). But man, talk about a morale killer. Most HR experts are advising against "clawing back" those raises because the turnover cost would probably be higher than the payroll savings.
The State Law Exception
Here is a detail a lot of people miss: this ruling only affects federal law.
If you live in California, New York, or Washington, this ruling might not mean much to you. Those states have their own salary thresholds that are already much higher than the federal $35,568.
Expert Note: Never assume the federal ruling is the final word. If your state law is more generous to the worker, your employer must follow the state law.
The Future of Overtime in a New Administration
Since this ruling came down just as the 2024 election cycle wrapped up, the political context is everything.
The Department of Labor under the Biden administration could have appealed this to the Fifth Circuit. However, with a change in leadership at the White House in early 2025, any appeal is likely to be dropped or "settled" into oblivion. The incoming administration has historically favored the lower 2019 thresholds, seeing them as more "business-friendly" and less likely to cause inflation through rising labor costs.
We are likely looking at a long period of stability—or stagnation, depending on how you view it—at that $35,568 mark.
Actionable Steps for Workers and Bosses
This isn't just "legal news"—it's your daily life. Here is what you actually need to do:
For Employees:
- Check your local laws. If you're in a state like California, your threshold is likely closer to $66,560. Don't let your boss use the Texas ruling as an excuse to deny you overtime if state law says otherwise.
- Review your job description. Since the "duties test" is now the primary way to determine if you're exempt, make sure you actually do executive or administrative work. If you’re just "called" a manager but you spend 90% of your time doing manual labor or retail tasks, you might still be entitled to overtime regardless of your salary.
For Business Owners:
- Don't panic-react. Don't immediately slash salaries that you raised in July. You’ll lose your best people.
- Audit your "Exempt" staff. The court just reminded everyone that duties matter more than salary. If you have someone making $40,000 who doesn't actually have "discretionary authority," they need to be paid overtime anyway.
- Watch the 2025 transition. Stay close to your employment counsel as the new DOL leadership takes over. There may be a new, more modest rulemaking process started in late 2025.
The "salary-only" shortcut is dead for now. We're back to the old-school way of looking at what people actually do at their desks. It's more complicated, sure, but that’s the reality of the law today.
Next Steps for Compliance
To stay ahead of these changes, you should immediately conduct a "Duties Audit" for any employee earning between $35,568 and $58,656. Document their primary responsibilities to ensure they meet the "white-collar" exemption criteria, as this is now the primary legal battlefield. If their duties are primarily clerical or manual, you should keep them as non-exempt to avoid back-pay lawsuits, regardless of the court's ruling on the salary threshold.