Today (November 15, 2024), the U.S. District Court for the Eastern District of Texas issued its ruling invalidating the entirety of the Department of Labor’s (DOL) overtime final rule. In his ruling, Judge Jordan stated that while DOL has the authority to define and delimit the terms of the overtime exemption, “that authority ‘is not unbounded.’” He explained, "the minimum salary level imposed by the 2024 Rule 'effectively eliminates' consideration of whether an employee performs 'bona fide executive, administrative, or professional capacity’ duties in favor of what amounts to a salary-only test.” He also said that the Department’s automatic updates to the minimum salary threshold every three years "violates the notice-and-comment rulemaking requirements of the [Administrative Procedure Act].”

In light of this decision, the minimum salary threshold is once again set to $35,568, and the threshold for highly compensated employees is set to $107,432.

DOL may appeal the decision to the 5th Circuit, but DOL under the new administration will almost assuredly abandon its defense of the rule. Over the next four years, it may choose to issue its own rulemaking to update the threshold.

This is a victory for NLBMDA and its coalition partners who have repeatedly urged the Biden Administration and DOL to withdraw its new framework for overtime regulations, which disproportionately impacts small businesses and the workers they employ, and is part of coalition efforts reviewing legislative and legal options on behalf of LBM dealers and the small business community. Business groups and employer organizations are already considering a lawsuit challenging the rule, but the phased-in implementation will impact how litigation is both pursued and decided over the next six months.

 For questions, please contact NLBMDA at membersupport@dealer.org.