A federal court vacated the Department of Labor's 2024 overtime rule in November 2024, restoring the salary threshold for overtime exemption to $35,568 per year — down from the $43,888 the rule had briefly required. For small employers, the practical change is that workers reclassified as overtime-eligible during the rule's months in force can return to exempt status, and payrolls written around the higher thresholds need another rewrite. The decision, reported by Reuters at the time, applied nationwide.
Business News 7 publishes information, not legal advice — classification decisions for specific employees belong with an employment attorney.
What did the 2024 rule do, and what happened to it?
The rule raised the salary threshold below which employees must receive overtime pay regardless of duties, in two steps: to $43,888 in July 2024 and a planned $58,656 in January 2025. A Texas-based federal district court struck the rule down on November 15, 2024, holding that the Labor Department had relied too heavily on salary alone, reverting the threshold to the 2019 level of $35,568. The department's appeal options narrowed through 2025; the 2019 threshold governs as of this reporting.
What should owners do about employees already reclassified?
The rollback is not automatic for people, only for rules. Employees moved to hourly or given raises to meet the 2024 threshold can lawfully return to exempt status if they meet the 2019 salary floor and the duties test — but undoing a raise or a schedule change carries retention costs that no court ruling compensates. Employment law firms advising through 2025 consistently recommended auditing classifications against the current $35,568 floor rather than simply reversing every change made mid-2024.
What changes overall for small business?
Budget certainty, briefly. The vacated rule would have made roughly four million more workers overtime-eligible at its second step, per the department's own 2024 estimates; that cost is off the table for now. The uncertainty is not: salary-threshold rulemaking has now flip-flopped across three administrations, and owners writing multi-year payroll plans should assume the number can move again in either direction.
What the evidence establishes is a reversion to the 2019 threshold with a documented path back for reclassified staff. What remains unknown is whether future rulemaking or litigation moves the number again — no outcome is scheduled.
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