Court Move Pauses Efforts to Revive DOL’s 2024 OT Final Rule

Attorneys for the U.S. Department of Justice recently asked the Fifth U.S. Circuit Court of Appeals to put a temporary hold on the Department of Labor’s appeals in two cases challenging the latter agency’s 2024 overtime final rule. As you may recall, that rulemaking sought to greatly increase the salary thresholds for workers to be classified as exempt from OT.

The requested holds came as the clock wound down on the government to respond, in formal opening briefs, to federal court decisions that invalidated the final rule and questioned the ability of the Department of Labor (DOL) to define and delimit a Fair Labor Standards Act (FLSA) exemption for employees “employed in a bona fide executive, administrative or professional [EAP] capacity.”

The originating appeals from the DOL came under former agency leadership installed by then-President Joe Biden.

The government’s April 24 court filing stated: “Due to the recent change in administration on January 20, 2025, there is new Department of Labor leadership. The department has informed undersigned counsel that it intends to reconsider the rule at issue in this litigation. … Abeyance will permit agency leadership time to engage in this decision-making process and will conserve judicial resources.”

The district courts that handed down the appealed decisions — the District Court for the Eastern District of Texas and the U.S. District Court for the Northern District of Texas — unanimously did not oppose the filed request from the Department of Justice (DOJ). The Fifth Circuit appellate court will now make the final call.

The court filing — and its likely acceptance — doesn’t alter how employers and their total rewards professionals currently operate their compensation and employee classification policies. This is primarily a legal move, but it may portend future rulemaking in this area by the Trump administration.

The filing is, though, the latest move in a long and winding chess match involving two presidential administrations and a variety of court cases.

How We Got Here

In April 2024, the DOL, with the support of the Biden administration, issued its final rule to:

Significantly raise the minimum salary for exemption as an EAP employee under the FLSA — from the $35,568 annual standard outlined in the DOL’s 2019 final rule to $43,888 beginning on July 1, 2024, to $58,656 on Jan. 1, 2025, with subsequent automatic escalator provisions.
Expand access to overtime pay to an estimated 5 million American workers who had been classified as salaried (or exempt) by their employer.
Significantly increase the total annual compensation level for exemption as a “highly compensated employee” (HCE) under the FLSA.

In the months leading up to the November 2024 elections, the final rule was challenged in several lawsuits spanning multiple U.S. district courts, and on Nov. 15, the Eastern District of Texas federal court issued a decision in the case State of Texas v. Department of Labor that invalidated implementation of the rule. On Dec. 30, the Northern District of Texas federal court piled on, ruling against the DOL in the related case Flint Avenue, LLC v. Department of Labor.

On Nov. 26, three weeks after Trump’s election win but less than two months before Inauguration Day, the DOL appealed the State of Texas verdict. After the pro-business new administration took office, some economists and legal pundits predicted the agency, led by Trump-installed leadership, would rescind its State of Texas appeal, close out the related cases and halt any federal momentum toward:

Raising the bar for EAP exempt status;
Increasing the salary threshold; and,
Regularly updating that threshold with automatic salary escalator provisions.

However, on Jan. 22, two days after Inauguration Day, DOJ attorneys sent a letter to the Fifth Circuit appeals court requesting an extension on the deadline to file an opening brief in the State of Texas appeal. Similar moves occurred in late February and March for the Flint Avenue case.

So, What Happens Now?

The court filing is the first clear indication that the DOL will not likely seek to resurrect the minimum salary rule in its current form. The department may ultimately withdraw the April 2024 rule entirely … or at least reconsider its stance.

Legal pundits have posited that the Trump administration could maintain the appeal for the purpose of defending the rulemaking authority of the government through its federal agencies (Workspan Daily touched on this in the article “Trump Order Puts Independent Federal Agencies Under His Control”). A possible path could be the withdrawal of the 2024 rule and the development of new rulemaking — perhaps with a greater benefit (or less financial impact) for employers. (This was, in many ways, the approach the first Trump administration took after an Obama-era minimum salary rule also was invalidated by the courts.)

On Feb. 14, the full Fifth Circuit appellate court reaffirmed its previous stance that the DOL has the authority to create a salary threshold as part of its role in defining overtime exemptions. However, that ruling reinforced guardrails that the agency cannot set a salary threshold so high that it effectively negates the duties test of exempt status, which is a formal callout from the FLSA.

For right now, employers and TR pros should follow the current exemption guidelines and salary thresholds within the 2019 DOL final rule.

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