Companies across the United States have been looking for guidance on the federal minimum wage increases scheduled for January 1, 2025.
But on November 15, 2024, a federal district court in Texas struck down the overtime rules. The court ruled that the Department of Labor (DOL) had exceeded its authority by raising the minimum annual salary for exemption as executive, administrative, or professional employees under the Fair Labor Standards Act.
This ruling invalidates all of the new overtime regulations, including the increases that took effect in July 2024 and the additional increases scheduled for January 1, 2025.
Minimum Annual Compensation Threshold
What’s a threshold? Here, the threshold is the minimum annual wage an employee must be paid in order to be considered exempt from overtime pay. Keep in mind that these thresholds apply only to people who’re bona fide executive, administrative, or professional employees based on the federal test.
You may remember that the DOL’s rule increased the minimum annual salary threshold from $35,568 to $43,888, with a scheduled increase to $58,656 beginning January 1, 2025.
With this ruling, the federal government’s minimum salary threshold for overtime exemption returns to $35,568, and the highly compensated employee threshold goes back to $107,568.
What Does this Mean for Your Company?
For now, the ruling means that the federal minimum salary thresholds under the FLSA have returned to the baseline which, under federal law, should always be considered when an employer is setting annual compensation for professional, administrative, and executive employees.
The federal salary thresholds will not increase on January 1, 2025, either.
Don’t forget, however, that New York State has its own salary thresholds that you must keep in mind if you employ executive and administrative employees. For New York-based employers, there’s no getting around the New York minimums, which remain considerable.
You can find all that information here.
What’s Next for the Feds?
The federal DOL technically can now appeal the decision, but an appeal being fully pursued is pretty unlikely given the upcoming change in administrations.
What’s Next for New York Employers?
Even though there’s drama going on at the federal government, New York employers also must comply with New York law.
Remember that the New York Department of Labor requires your compliance with New York exempt employee thresholds which currently (as of 2024) range from a low of $58,458.40 per year upstate to a high of $62,400 per year in New York City, Westchester, Nassau, and Suffolk Counties. These thresholds increase on January 1, 2025.
If you have questions about whether one of your employees qualifies as exempt either because of her job description or her annual compensation, contact us. It can be confusing.
And we’re always happy to help.
