FLSA Updates 2025: New Overtime and Salary Threshold Developments
The Fair Labor Standards Act (FLSA) continues to evolve. In 2024–2025, the U.S. Department of Labor (DOL) issued new regulations on overtime pay and salary thresholds for exempt employees, followed by significant court rulings that affect employers nationwide.
Background reading: For a full explanation of the Fair Labor Standards Act and its core requirements, read Fair Labor Standards Act (FLSA): Key Provisions and Employer Duties.
2024 Final Rule on Overtime Exemptions
In April 2024, the DOL published a Final Rule in the Federal Register raising the minimum salary for executive, administrative, and professional (EAP) employees under 29 CFR Part 541 exemptions.
- Effective July 1 2024 – weekly salary level: $844 (annual $43,888)
- Scheduled for January 1 2025 – weekly salary level: $1,128 (annual $58,656)
Court Decision and Status
In late 2024, a federal district court in Texas vacated the rule, holding that the DOL exceeded its statutory authority. As of early 2025, the prior salary threshold ($684/week or $35,568 per year) remains in effect pending appeal. (CourtListener – State of Texas v. U.S. Department of Labor)
Highly Compensated Employee (HCE) Level
The same 2024 rule proposed raising the HCE threshold from $107,432 to $151,164 per year. That increase is also on hold due to the court decision. (29 CFR 541.601)
Independent Contractor Rule
The DOL’s Final Rule on Employee or Independent Contractor Classification took effect on March 11 2024. It revised the analysis for determining whether a worker is an employee or a contractor under the FLSA, emphasizing a “totality of the circumstances” economic reality test.
Enforcement Priorities
The Wage and Hour Division continues to focus on misclassification and unpaid overtime violations. Employers should review salaried classifications and job duties to confirm compliance with the current rules. (DOL – WHD Newsroom)
Employer Checklist
- Verify that all exempt employees meet both the duties and salary tests under current law.
- Prepare for possible future salary increases if the DOL rule is reinstated after appeal.
- Review independent contractor relationships under the new economic reality test.
- Keep accurate records of hours worked and wages paid for non-exempt employees.
- Monitor official DOL updates and Federal Register notices for further changes in 2025.
Official Sources and Further Reading
- U.S. Department of Labor – FLSA Overview
- Code of Federal Regulations – 29 CFR Part 541
- Federal Register – Defining and Delimiting the Exemptions Rule (2024)
- Federal Register – Independent Contractor Classification Rule (2024)
- DOL – Wage and Hour Division Newsroom
Disclaimer
The information provided on Accounting Portal is for general informational and educational purposes only and does not constitute professional accounting, tax, financial, or legal advice.
While we strive for accuracy and timeliness, no representation or warranty is made regarding completeness or reliability. Always consult a qualified professional before making any business, tax, or financial decisions.
Neither Accounting Portal nor its authors are liable for any loss or damage resulting from the use of this information.
© 2025 Accounting Portal. All rights reserved.