The
overtime pay rule reversal in November 2024 means many workers who would have become eligible for overtime pay under a new
Department of Labor (“DOL”) rule are no longer covered.
The DOL had planned to raise the salary threshold for overtime eligibility, expanding overtime protections to more salaried employees. However, a court decision overturned this rule, keeping the threshold at its lower 2019 level and limiting workers’ access to overtime pay.
What Happened with the Overtime Pay Rule Reversal?
The DOL’s 2024 Overtime Rule was set to raise the salary threshold to $43,888 in July 2024 and $58,656 in January 2025, making more salaried workers eligible for overtime pay. However, on November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated this rule, meaning it’s no longer in effect. Now, the threshold is back to $35,568 annually from the 2019 rule.
This reversal is significant because it affects how many workers qualify for overtime. If you earn less than $35,568, you’re automatically entitled to overtime for hours over 40 per week. But if you earn more, your eligibility depends on your job duties.
How Does The Overtime Pay Rule Reversal Affect You?
If you earn above $35,568, your employer might classify you as exempt from overtime, but this isn’t automatic. You must meet specific job duties, such as managing others or making key decisions, to be exempt. For example, if you’re a salaried worker earning $40,000 and your job is mostly routine, you might still be entitled to overtime pay.
The overtime pay rule reversal could possibly lead to misclassification, where employers wrongly label workers as exempt, denying them overtime.
What Can You Do if You are Wrongfully Denied Overtime?
If you think you’re being denied overtime pay, consider taking these steps:
- Track Your Hours: Document any overtime you work without extra pay and any related communications.
- Check Your Status: Assess whether your job involves executive, administrative, or professional duties. If not, you might be non-exempt.
- Consult a Legal Expert About Filing a Claim: Class action lawsuits can help if many workers face similar violations. Contact a law firm which specializes in wage and hour litigation for a legal consultation and, importantly, to ensure compliance with FLSA’s statute of limitations (typically two years, extendable to three for willful violations).
The DOL’s 2024 Overtime Rule: Context & Legal Challenge
On April 26, 2024, the DOL published a final rule, “Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees.”
This rule aimed to update the Fair Labor Standards Act (FLSA) by increasing the salary threshold for overtime exemptions. The phased implementation included:
- Effective July 1, 2024, raising the threshold to $43,888 annually ($844 per week).
- Effective January 1, 2025, further increasing it to $58,656 annually ($1,128 per week).
- Additionally, the highly compensated employee threshold was set to rise to $132,964 on July 1, 2024, and $151,164 on January 1, 2025, with automatic updates every three years starting July 1, 2027.
It was estimated to extend overtime protections to millions of workers, particularly those earning between the previous threshold of $35,568 and the proposed new levels.
See also: Final Rule: Restoring and Extending Overtime Protections and DOL April 23, 2024 News Release.
Court Decision and Overtime Pay Rule Reversal
On November 15, 2024, U.S. District Judge Sean Jordan, Eastern District of Texas, blocked the Biden Administration rule expanding the ability for overtime pay for millions more salaried workers in the United States by ruling that the Department of Labor could not prioritize employee wages over job duties when determining eligibility. Judge Blocks Biden administration’s rule to expand overtime pay for millions.
This decision meant that the rule, including the July 1, 2024 increase, was effectively nullified retroactively.
As a result, the DOL reverted to enforcing the 2019 rule’s thresholds:
- Minimum salary level: $684 per week, equivalent to $35,568 annually.
- Highly compensated employee threshold: $107,432 annually.
Lawsuits regarding the 2024 final rule are currently pending in two other federal district courts, and the United States has filed a notice of appeal from the November 15 decision.
Implications for Workers: Are You Affected?
The overtime pay rule reversal has significant implications for workers, particularly those earning between $35,568 and $43,888, who would have been automatically eligible for overtime pay under the 2024 rule’s first phase.
Now, their exemption status depends on meeting certain requirements of the FLSA’s job duties test for executive, administrative, and professional employees, including:
- Executive Exemption: Managing the enterprise or a department, directing employees, and have the authority to hire and fire other employees.
- Administrative Exemption: Performing office or non-manual work directly related to management or general business operations, with discretion and independent judgment.
- Professional Exemption: Work requiring advanced knowledge, typically in a field of science or learning, and involving consistent exercise of discretion.
For example, a store manager earning $40,000 who primarily handles routine tasks like stocking shelves might not meet these criteria and should be non-exempt, entitled to overtime pay.
Employers, however, might misclassify such workers as exempt, especially in the confusion following the rule reversal, leading to potential wage theft.
Misclassification Risks and Wage Theft
The lower salary threshold increases the risk of misclassification, where employers label workers as exempt without meeting the job duties test.
Signs of potential misclassification include:
- Working over 40 hours weekly without additional compensation.
- Performing routine tasks without managerial or decision-making authority.
- Employers not tracking hours worked, assuming salaried status exempts overtime requirements.
Class Action Lawsuits as a Remedy
Employees can file lawsuits under the FLSA to recover unpaid minimum wages and overtime. Successful cases have resulted in significant settlements:
Have You Been Wrongfully Denied Overtime Pay?
The overtime pay rule reversal has created uncertainty, potentially leaving workers vulnerable to misclassification and wage theft. Your rights, however, under the FLSA remain protected. If you believe you’ve been wrongly denied overtime pay by your employer, Kehoe Law Firm is here to help.
Our experienced class action attorneys are dedicated to protecting workers’ rights. For a free, no-obligation evaluation of potential legal claims, send us a message or contact Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], [email protected].
KLF’s class action legal services are provided on a contingency-fee basis, meaning clients are not responsible for any fees or litigation expenses.
About Kehoe Law Firm, P.C.
Kehoe Law Firm, P.C. is a plaintiff-side class action firm, fiercely committed to safeguarding investors and consumers from corporate fraud and misconduct. Nationally recognized, our attorneys have taken the reins as Lead or Co-Lead Counsel in high-profile cases, securing over $10 billion in recoveries for institutional and individual investors and consumers. Through relentless class action litigation, we tackle securities fraud, fiduciary breaches, unfair mergers and acquisitions, and antitrust violations head-on. Beyond that, we champion whistleblowers and fight against data breaches, consumer scams, employment law abuses, retirement plan mismanagement, and deceptive business practices. With a no-nonsense, results-focused approach, we chase down meaningful outcomes—delivering justice and substantial recoveries for those we represent.
