Overtime Rule: Latest Update on Paying Exempt Employees

The rollercoaster ride continues as federal regulators reevaluate the current overtime rule and what it means to meet the salary level test.

In 2024, the Biden administration’s Dept. of Labor (DOL) finalized a rule that aimed to dramatically increase the salary threshold for exempt employees. But the rule met with strong resistance from business groups and other stakeholders who took legal action against it.

The latest development: On April 24, 2025, the DOL filed an unopposed motion to hold appeals in abeyance. That’s not a surprising move, now that the DOL is under the control of the Trump administration, with its pro-business stance.

The Fifth Circuit Court of Appeals granted a stay of litigation. However, it lasts for only 120 days. So the clock is ticking, and employers may soon see more changes.

2 Overtime Rule Cases

Back in 2024, the cases the federal appeals court had agreed to hear – State of Texas v. Department of Labor and Flint Avenue LLC v. Department of Labor – came from two district courts in Texas. Those two rulings were favorable to employers.

At issue in the cases, and others like them, was whether the DOL overstepped its bounds when it raised the salary level to such a high dollar amount that it essentially negated the duties test for who’s exempt from overtime.

Under the DOL’s 2024 rule, the salary threshold to qualify for the “white collar” exemption under the Fair Labor Standards Act (FLSA) would have increased in two phases as follows:

• $844 per week (which equates to $43,888 annually), and
• $1,128 per week (which equates to $58,656 annually).

Although the first phase was implemented, it was later reversed. Currently, the salary threshold for executive, administrative and professional exempt employees remains $684 per week (which equates to $35,568 per year) – it’s been at that amount since 2019.

Factoring in the Duties Test

So now, employers are in wait-and-see mode regarding the salary level test for who’s exempt from overtime. However, the duties test remains unchanged.

For example, under the FLSA’s learned professional exemption, an employee’s primary duty must be the performance of work requiring advanced knowledge. That’s defined as work which is predominantly intellectual in character. It must include work requiring the consistent exercise of discretion and judgment.

Of course, getting FLSA exemptions right is essential to avoiding costly penalties.