Overtime rule changes halted: What businesses and nonprofits need to know

A Texas court has halted the U.S. Department of Labor’s revised overtime rules that would have allowed more employees to qualify for additional pay.

On Nov. 15, the U.S. District Court for the Eastern District of Texas vacated the rule proposing raising the thresholds, effective July 1, 2024 and Jan. 1, 2025.

The court ruling cancels the July 1 increases and reverts overtime pay thresholds to the old salary of $684 a week ($35,568 a year) for EAP workers. The court’s decision also sets aside the increased threshold for highly compensated employees (HCE), returning the salary to $107,432 from $132,964 annually.

Many businesses and nonprofits were concerned about the impact on their budgets, and the Department of Labor (DOL) estimated the new rule would make roughly 4 million employees eligible for overtime.

Looking ahead

While the new overtime thresholds are on hold, the DOL could appeal the court’s decision. Additionally, it’s not known what position the incoming Administration will take.