The Department of Labor has formally rescinded its 2024 overtime rule, restoring prior salary thresholds and exemption standards following federal court decisions that eliminated the regulation. The rollback resets the federal salary threshold for overtime exemptions to $684 per week (the level established in 2019), walking back the 2024 rule’s phased increases that would have lifted that figure significantly higher. The DOL framed the action as implementing the court decisions that struck down the rule, but employers are left navigating a more complicated situation than a simple reversion.
“Employers generally can revisit compensation or classification changes made solely to comply with the now-rescinded 2024 overtime rule, but this is not a simple ‘undo’ exercise,” says Adam Bouka, an associate at law firm Holland & Hart. “The biggest risks usually involve inconsistent implementation, employee-relations concerns and failure to account for state-law requirements.”
Companies that raised salaries or reclassified workers over the past two years have real options, but real exposure, as well, Bouka says. Pulling back compensation or flipping exempt status again can create litigation risk, particularly if the changes are applied inconsistently across similarly situated employees. Bouka advises employers to document the rationale for any changes and apply them uniformly.
Employers who moved workers to non-exempt status and paid overtime can restore exempt classifications if those employees satisfy both the salary basis and duties tests. But doing this poorly invites scrutiny. “Repeated classification changes can create litigation risk if the employer has not conducted a defensible duties analysis,” Bouka says. “Employers should treat this as a fresh exemption review, rather than simply reversing a prior decision.”
Much of the recent compliance focus has been around salary thresholds, which may have obscured a more fundamental question. “Many employers focused heavily on salary thresholds over the last two years, but the more overlooked issue is whether exempt employees are actually performing exempt duties in practice,” Bouka says. “This is a good time to audit job descriptions, manager expectations, remote-work realities and timekeeping practices to ensure the documentation matches the day-to-day role.”
In other words, a worker may clear the salary threshold and still be misclassified if the duties test is not met. Job descriptions written years ago, roles reshaped by remote work and managers who have quietly expanded or narrowed responsibilities can all create gaps between what’s on paper and what employees do.
State law doesn’t roll back
The federal action changes nothing at the state level. California, New York and Washington maintain higher salary thresholds and, in some cases, different exemption standards altogether. For multi-state employers, the operative rule in any given jurisdiction is the most employee-protective one, regardless of what the DOL does federally, says Bouka.
HR leaders managing workforces across multiple states should map their exempt populations against each relevant state threshold before making any classification decisions. Compliance with the restored federal standard may still leave an employer out of compliance in the states where much of their workforce actually sits.
The DOL’s action resolves the immediate legal uncertainty created by the court decisions, but it does not close the door on future rulemaking. Administrations change and salary thresholds have historically been a recurring focus of Wage and Hour Division activity.
Bouka says HR leaders should continue tracking Wage and Hour Division enforcement priorities, proposed rulemaking and state-law developments. “Rather than assuming the issue is permanently settled,” he says, employers should treat ongoing monitoring as standard practice.
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