A rule that would have significantly raised the salary threshold for overtime pay has just been struck down by a federal judge—less than two months before it was set to take full effect. The court ruled that the Department of Labor (DOL) overstepped its authority by pushing the threshold too high and by including automatic adjustments every three years. With this decision, the threshold is now set back to the previous level of $35,568, undoing the recent increases.
While the DOL may appeal this ruling, it’s unlikely the incoming Trump administration will pick up the fight, leaving millions of workers and employers wondering what’s next.
What Happens Now?
The DOL still has the opportunity to appeal the decision. However, with a presidential transition looming, any appeal is on a tight timeline. Historically, Trump’s Department of Labor has been less inclined to push for expansive worker protections, so it’s unlikely they will reinstate the blocked rule. Instead, we may see a scaled-back version or no action at all.
For workers, this means the anticipated expansion of overtime eligibility is stalled indefinitely, effectively giving some workers a pay cut. However, it also means that some employers may take advantage of the uncertainty to walk back any changes they had implemented in anticipation of the higher salary threshold.
What Should Employers Look For?
Employers now face decisions that will affect their workforce directly. For those who had already raised salaries or reclassified employees, reversing those changes could cause significant disruption. Reducing pay or returning employees to non-exempt status might be legal in some cases, but it can lead to negative consequences, including decreased morale, higher turnover, and potential legal challenges.
Employers should also prepare for increased scrutiny from workers and legal professionals. Misclassification lawsuits may rise as employees examine whether their job duties truly meet the requirements for exempt status under the FLSA. It’s more important than ever for employers to review roles and ensure they are properly classified based on duties—not just salary thresholds.
No matter what, communication is key. If you’ve already shared plans to adjust salaries or classifications, or if workers are expecting changes, be transparent about your next steps. Clearly explain why decisions are being made and how they align with compliance and business goals. This transparency will go a long way in maintaining trust.
Employers should also keep an eye on state-level developments. While this federal rule may have stalled, some states have their own salary thresholds for exempt employees, which may still require compliance. Staying proactive and seeking legal guidance can help employers avoid missteps.
What’s Next
This ruling underscores how worker protections often hang in the balance of legal and political battles. Employees who expected salary increases or expanded overtime eligibility are now left in a frustrating position. Employers who want to support their workforce can step up by maintaining fair pay policies, even in the absence of federal mandates.
For workers, this is a moment to remain informed and engaged. Understanding your rights under the FLSA and keeping up with state laws can help you navigate this uncertain landscape. Advocacy for stronger protections will remain critical, as meaningful change often requires collective pressure.
Employers have an opportunity to prioritize fair treatment and retention strategies. Choosing to honor pay increases or maintain non-exempt status for employees affected by the rule reversal can strengthen trust and engagement. Forward-thinking businesses will recognize that investing in their workforce benefits everyone in the long run.
While this decision is a setback for millions of workers, the fight for fair wages and overtime protections is far from over. It’s a reminder that progress often requires sustained effort—and that the push for equitable pay structures will continue.
Stay Informed and Take Action
If you have questions about how this ruling impacts your company or workplace, don’t hesitate to seek clarity or guidance. Staying informed and making the right decisions now can prevent bigger challenges down the road. Let’s connect to discuss how you can protect your interests, ensure compliance, and create a workplace built on trust and fairness.
