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Update: Federal Overtime Rule Vacated What it means for employers in New York

Earlier this year, HR One shared news regarding the U.S. Department of Labor’s (DOL) final regulation increasing salary thresholds for overtime exemptions under the Fair Labor Standards Act (FLSA). However, on November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the DOL’s rule on a nationwide basis. This ruling invalidates both the July 2024 salary threshold increase and the more significant January 2025 increase, effectively reverting the federal salary threshold to $684 per week ($35,568 annually). The court also struck down the automatic escalator provision that would have raised thresholds every three years.

However, as previously highlighted, New York’s thresholds for the executive and administrative exemptions remain higher than federal standards, and employers must continue to comply with state-specific requirements:

2024

 2025

For professional and highly compensated employees, where New York does not impose distinct thresholds, the federal standards DO apply. These revert to $684 per week for the professional exemption and $107,432 annually for the highly compensated employee exemption.

Considerations for Employers Who Made Adjustments

Employers who raised salaries to comply with the now-invalidated July 2024 rule may consider reverting to previous salary levels. However, this decision should be approached carefully, as salary reductions could impact employee morale and trust. Employers should weigh these implications against potential payroll savings and communicate any changes clearly and thoughtfully.

Next Steps

Employers should:

• Ensure ongoing compliance with New York’s higher thresholds for executive and administrative exemptions.
• Review the classification and compensation of professional and highly compensated employees against restored federal standards.
• Maintain accurate job descriptions to ensure roles meet exemption criteria.
• Stay informed about potential appeals or regulatory updates.

While the federal court decision may reduce compliance burdens for some, New York employers remain subject to state-level standards, which continue to demand attention. HR One will monitor developments and provide updates to help you navigate these changes effectively. Contact us for resources, including exemption worksheets, to ensure compliance.