Federal Overtime Cases Cause Confusion For Employers And Workers

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It's been a head-spinning few months for employers, as a mandate that would have dramatically boosted the overtime salary threshold for white-collar workers was overturned in November by a federal judge—less than two months before its final phase was to take effect.

In April 2024, the U.S. Department of Labor issued a new rule that increased the salary at which some employees become eligible for overtime pay. Under the Fair Labor Standards Act, an employer is generally required to pay an employee time-and-a-half for every hour they work over 40 hours a week. However, some executive, administrative and professional employees are exempt from that requirement.

On Jan. 1, 2025, the threshold was to increase again to $58,656, covering an additional 3 million workers. But on Nov. 15, the U.S. District Court for the Eastern District of Texas struck down the rule, negating both raises. In December, a federal judge for the Northern District of Texas similarly rejected the rule in a separate case filed by a software and marketing company.

For businesses and human resources professionals in the Columbus region, the back-and-forth, up-and-down changes have been a source of concern, if not dismay.

"It's just messy," says Sharon Thomas-DeLay, owner and managing consultant of human resources firm GO-HR and president-elect of the nonprofit Human Resources Association of Central Ohio (HRACO).

"Small employers try to do what they need to do," she says. "So, many employers did the increase on July 1, although there were some who said, 'Nope, let's see what happens.' The general thinking was that July would happen, but January wouldn't. But not because people thought that the White House would flip."

Many observers thought the rule wouldn't take effect because "we've kind of been down the road before," says Alicia Nesline Shaw, a partner and employment law attorney at Carlile Patchen & Murphy. In 2016, the U.S. District Court for the Eastern District of Texas struck down a similar increase that the Obama administration sought to enact.

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