DOL Officially Rescinds Biden-Era Overtime Rule

The U.S. Department of Labor (DOL) formally rescinded the Biden administration’s 2024 overtime rule earlier this month, which allows for the return of the lower salary thresholds that were established during President Trump’s first term.

Two federal court decisions in Texas struck down the rule before it could fully take effect. In response, the DOL issued a “technical correction” that removed the invalidated rule from the federal regulations and reinstated the prior overtime exemption standards.

What the Biden-Era Rule Would Have Changed

The now-rescinded rule would have significantly expanded overtime eligibility under the Fair Labor Standards Act (FLSA) by increasing the salary threshold for certain exempt employees from $35,568 annually to $58,600 annually.

With the proposed changes, employers would have been required to pay overtime to many salaried executive, administrative, and professional employees earning less than $1,128 per week when they worked more than 40 hours in a workweek.

The rule also included automatic increases to the salary threshold every three years based on wage growth.

Federal Litigation Challenging the Rule

Several lawsuits challenged the rule, including actions brought by the State of Texas and private employers. Federal courts in Texas vacated the 2024 rule and the Trump administration stopped defending the rule in court.

The Current Overtime Rules 

With the formal rescission now complete, employers should continue following the standards established under the 2019 Trump-era rule:

• The minimum salary threshold for exempt employees remains at $684 per week and $35,568 annually.
• The Highly Compensated Employee (HCE) exemption threshold remains $107,432 annually.

It is important to note that employees must still satisfy both the salary basis test and the applicable duties test to qualify as exempt from overtime requirements.

What Employers Should Do Now

Although the DOL described the amendment as largely procedural, the action officially removes the Biden-era framework from federal regulations and signals that the current administration does not intend to revive the higher salary thresholds.

Employers should:

• Review employee classifications to ensure compliance with current federal standards
• Confirm that exempt employees satisfy applicable duties tests
• Monitor state overtime laws, which may impose higher salary thresholds or broader overtime protections than federal law
• Consult KM&M labor and employment counsel regarding any classification or wage-and-hour compliance questions