A District Court judge in Texas overturned the Biden administration's Department of Labor (DOL) 2024 Rule, which had raised salary caps for non-exempt workers and reclassified them. Employee classification reverted to the standard that was in place before the initial July 2024 changes. This created confusion for employers given how many changes and reversals affected Texas overtime regulations in such a short span. Here's what you need to know, including how the matter was ultimately resolved.
Background on the Overtime Rule
Texas follows the federal Fair Labor Standards Act (FLSA) for overtime requirements. Employers must pay non-exempt employees 1.5 times their regular rate for overtime. Exempt full-time employees under contract who meet certain white-collar job duties do not have to be paid overtime.
The Biden administration's 2024 Final Rule raised the minimum salary threshold for exempt employees from $35,568 ($684 per week) to $43,888 ($844 per week), effective July 1, 2024. A second threshold increase was scheduled to take effect on January 1, 2025, raising it further to $58,656 ($1,128 per week).
However, a federal judge in Texas ruled in November 2024 that the DOL had overstepped its authority. The judge found that the DOL had imposed such drastic changes to minimum salary requirements that it effectively ignored the duties test used to classify employees under the FLSA. The 2024 Rule was vacated, and employers reverted to the FLSA exempt standards that were in place before July 1, 2024.
Implications for Texas Employers
Employers who had reclassified employees or raised salaries back on July 1, 2024, had to unwind that work. Exempt full-time employees fell back under the $35,568 salary threshold. The 2024 Rule had forced employers to either give exempt employees a significant pay raise for overtime compliance or reclassify them as non-exempt.
Texas returned to the previous overtime exemption standard under the FLSA, and employers had to decide whether to keep any changes made under the July 2024 increase or reverse them.
Compliance Strategies
The rapid changes in employee compensation rules created a compliance headache for Texas employers during this period. Affiliated HR & Payroll can help employers stay in compliance amid regulatory uncertainty like this. Our Certified Payroll Services help you keep payroll and employee classification aligned with local, state, and federal rules for hourly and salaried workers' overtime in Texas, even when the rules are changing quickly.
Best Practices in Employee Compensation Management
Outsourcing payroll services can save time and reduce risk in a fluctuating regulatory landscape. You don't have to track employee classification or salary threshold changes at the local, state, or federal level, because the payroll service takes on that responsibility for you.
Organizations should clearly communicate overtime rules for exempt and non-exempt employees and keep employment policies current. Employers who raised salaries for exempt employees in July 2024 and were weighing whether to reverse those increases should note that the decision is now settled: those higher salaries are no longer legally required, though many employers chose to keep them in place to avoid employee dissatisfaction.
The Bottom Line
On May 14, 2026, the U.S. Department of Labor published a technical amendment formally rescinding the 2024 Rule and restoring the 2019 salary thresholds as the governing federal standard, following the Fifth Circuit's dismissal of the case.
The enforceable federal threshold remains $684 per week ($35,568 annually), with the highly compensated employee threshold at $107,432. Employers who raised salaries in 2024 are not required to roll those changes back. Texas employers should still monitor this space, as congressional Democrats have introduced legislation (the Restoring Overtime Pay Act of 2026) that would raise the threshold again if passed. Affiliated HR & Payroll can help you stay ahead of whatever comes next.
Ensure your payroll complies with the latest Texas overtime regulations. Contact us today for a compliance review.