Federal Court Strikes Down New Rules Defining Overtime Exemptions

The scheduled increases to the salary threshold for the “white-collar” overtime exemptions are no longer in effect. The salary thresholds are set back to prior amounts. Dealerships should work with an attorney to determine how this change will affect planned or already made changes related to employee overtime exemption status.

Previously, employees classified as executive, administrative, and professional (“white collar”) were exempt from FLSA overtime requirements if they were paid a salary of at least $684 per week ($35,568 annually). In April 2024, the DOL issued a final rule to increase the threshold to $844 per week ($43,888 annually) on July 1, 2024. The threshold was set to further increase to $1,128 per week ($58,656 annually) on January 1, 2025. Since the final rule was vacated entirely, the pre-July 2024 salary thresholds are now in effect. The chart below summarizes the salary changes and what thresholds are effective today.

Employers may still use nondiscretionary bonuses and incentive payments (including commissions) that are paid on an annual or more frequent basis to satisfy up to 10% of the standard salary level. Existing exemptions for salesmen, partsmen, and mechanics primarily engaged in selling or servicing automobiles remain unchanged.

The future of this rule is uncertain. However, given the recent court ruling and rationale, combined with a new presidential administration taking office in January, the chances of the rule being revived seem unlikely. NADA will keep members apprised of any developments.

Additional resources can be found below. (LOG-IN REQUIRED)

• A Dealer Guide to Federal Wage and Hour, Child Labor, and Wage Discrimination Compliance
• NADA’s Previous Compliance Alert on Final Rule

Please Note: If you have questions, NHADA has several partners who offer legal services to members, including:

• ArentFox Schiff
• Bernstein Shur
• Devine Millimet & Branch
• McLane Middleton
• Sheehan Phinney

Of the five partners listed above, three firms have volunteered their expertise through the NHADA Employment Law Hotlines. This allows for free introductory phone calls on the topic of employment law.