The U.S. Department of Labor (DOL) has formally rescinded its 2024 overtime rule and restored the salary thresholds for the Fair Labor Standards Act (FLSA) "white collar" exemptions to the levels established in 2019. The change, issued as a "technical amendment" and effective immediately, largely aligns the regulations with federal court decisions that had invalidated the Biden-era rule. As a result, the applicable federal salary thresholds have reverted to $684 per week/$35,568 annually for most executive, administrative, and professional employees and $107,432 annually for certain highly compensated employees.
The now-rescinded 2024 rule would have increased these thresholds. Executive thresholds were intended to increase to $43,888 annually, with another planned increase to roughly $58,656. For highly compensated employees, the increase was initially to $132,964 with a planned increase to $151,164. Those changes never took effect due to litigation.
A key takeaway for employers is not simply the substance of this change, but the mechanism by which it occurred. The DOL’s action can be viewed as a response to judicial developments, rather than a purely policy-driven shift.
Two federal district courts in Texas vacated the 2024 overtime rule in its entirety, finding that the DOL exceeded its statutory authority by prioritizing salary level over the duties-based test embedded in the FLSA. Those decisions were subsequently left intact when the Fifth Circuit Court of Appeals dismissed the appeals in May 2026, effectively ending the litigation and solidifying the outcome.
Recent Supreme Court rulings and the erosion of the Chevron deference have further reinforced that courts will independently assess whether federal agencies have acted within their statutory authority, rather than automatically deferring to the agency’s interpretation of a statute. This increases the likelihood that major regulatory changes will face (and sometimes fail) judicial review. Regarding wage and hour policies, these regulations remain highly sensitive to political transitions. Shifts in administrations frequently generate a cycle of rulemaking, legal challenge, and recalibration, leaving employers to navigate a constantly evolving compliance landscape.
For employers, the immediate compliance impact is straightforward. The operative federal salary threshold remains unchanged from the level that has effectively been in place since late 2024, and salary thresholds are not scheduled to be automatically increased.
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