Overtime Rule Blocked Nationwide: What This Means for Employers

A Texas district court judge issued a decision blocking nationwide the Department of Labor’s rule increasing the salary thresholds for overtime exemptions under the FLSA. The ruling erases the Biden DOL overtime rule and resets the salary levels to their June 30, 2024 levels.

Background: The DOL’s final overtime rule went into effect July 1, 2024, and initially upped the salary threshold for overtime eligibility from $35k to $44k ($107k to $133k for highly-compensated employees). On January 1, 2025, those thresholds were set to jump to $58k and $151k respectively, and then automatically increase every three years based on inflation. The rule was subject to several legal challenges, one of which initially resulted in the rule being blocked in late June – but only for Texas state employees.

New decision: Today’s decision by Judge Jordan in the Eastern District of Texas invalidated the rule in its entirety and blocked the rule nationwide. While Judge Jordan acknowledged that the DOL has the authority to set salary thresholds for overtime exemptions – echoing a recent decision by the notably conservative Fifth Circuit Court of Appeals upholding such authority – “that authority is not unbounded.” Judge Jordan found that the salary thresholds in the DOL’s rule “effectively [and unlawfully] eliminate” the employee duties test part of overtime calculation under the FLSA, and further that the automatic increases every three years violate notice-and-comment rulemaking requirements under the FLSA.

Back to square one: The ruling erases the Biden DOL’s overtime rule and resets the salary thresholds back to $35,568 and $107,432, respectively. In conjunction with the imminent change in administration, likely spells the end of significant overtime changes for the foreseeable future.

What’s next: While the Biden DOL might appeal the ruling in its last days in power, the incoming Trump administration would almost immediately abandon the appeal. Whether the next Trump administration will issue its own rule remains to be seen; the first Trump administration made extremely modest increases to the salary thresholds, and could do something similar this time around. Regardless, major increases are off the table for the foreseeable future, as are automatic periodic increases – the latter have now been found to be unlawful multiple times.