The U.S. Department of Labor has formally rescinded the Biden administration’s 2024 overtime rule, officially restoring the federal salary thresholds established under a 2019 rule for white-collar overtime exemptions.
The action, announced May 15, follows federal court rulings in Texas last year that struck down the 2024 regulation and the DOL’s subsequent decision to withdraw its appeals of those decisions earlier this month.
As a result, the federal minimum salary threshold for most executive, administrative, and professional employees classified as exempt from overtime will remain at $684 per week, or $35,568 annually. The threshold for the highly compensated employee exemption will remain at $107,432 annually.
The now-rescinded 2024 rule would have increased the overtime exemption salary threshold in two phases — first to $844 per week beginning July 1, 2024, and then to $1,128 per week beginning Jan. 1, 2025. The rule also called for automatic increases every three years beginning in 2027.
The DOL said the rescission aligns federal regulations with the court decisions that already invalidated the rule nationwide.
The original 2024 rule drew significant concern from employers, particularly small businesses and nonprofit organizations, over compliance costs and operational impacts. Employers that could not absorb higher overtime costs often faced the prospect of converting salaried employees to hourly status to manage scheduling and overtime exposure.
Federal courts ultimately sided with the challengers to the rule, concluding that the salary thresholds were set so high as to effectively overshadow the duties test required under the Fair Labor Standards Act.
The DOL emphasized that salary level remains only one part of determining whether an employee qualifies for an overtime exemption. Employers must also satisfy the salary basis and duties tests under federal law.
The decision also eliminates the triennial automatic salary threshold increases included in the 2024 regulation, providing employers with greater certainty for workforce planning and compensation decisions.
The PA Chamber previously opposed significant expansions of overtime eligibility at both the federal and state levels, including Pennsylvania-specific proposals advanced during the Wolf administration. Employers warned these proposals would force them to convert salaried employees into hourly status, eliminating flexibility and risking a reduction in take-home pay.