By Daniel Okafor

The U.S. Department of Labor has rescinded its 2024 update to the Fair Labor Standards Act overtime salary threshold and restored the 2019 standard, according to HRD (hcamag.com).

The action unwinds a two-stage increase the prior administration had pushed through, including a scheduled January 1, 2025 boost that would have lifted the salary floor to $58,656 annualized.

What returns is the 2019 threshold of $684 per week, or $35,568 per year. Below that figure, an employee is non-exempt from overtime, regardless of job title.

The swing — roughly $23,000 of annualized salary floor, removed in two years — covers more ground than many entry-level raises.

What does the rescission change?

Fewer salaried workers qualify for the white-collar exemption. The 2024 rule had set the first-stage threshold at $844 per week ($43,888 annualized) effective July 1, 2024, and built in automatic future escalations. Both disappear with the rescission.

For employers, the practical fallout lands in three places:

• Reclassification: workers earning between $35,568 and $58,656 who were treated as exempt under the 2024 framework may revert to non-exempt status
• Payroll: overtime eligibility returns for affected salaried staff
• Timekeeping: organizations that deprioritized time-and-attendance tracking for newly non-exempt employees must rebuild those controls

The 2024 rule's heightened "highly compensated employee" threshold — $132,964 — also reverts to the prior $107,432 standard.

When does the change take effect?

The Department of Labor has indicated the rule will take effect upon publication in the Federal Register, with no extended compliance window. Employers should treat the change as immediate for planning purposes.

A replacement rule is in development. The agency has committed to a new notice-and-comment process, with a proposed rule expected in the coming months.

What is the state-level picture?

The FLSA is a federal floor, not a ceiling. California, New York, and Washington maintain higher salary thresholds for their own exemption rules. Multistate employers must apply the higher standard; federal preemption does not override state labor law.

In some states, the federal rescission changes very little, because the state threshold already exceeded the 2024 federal figure. In others, employees who had gained overtime eligibility under the 2024 rule will lose it. Map the restored federal threshold against each state's current requirement before finalizing reclassification.

What is the broader pattern?

The reversal continues a deregulatory shift across federal labor policy. The agency has moved to reconsider Biden-era rules on joint employer status, independent contractor classification, and prevailing wage determinations.

For HR leaders, the practical consequence is policy whiplash. Classification frameworks built on a single administration's threshold can require revision every two to four years. The current rule is unlikely to be the last word.

What should HR do first?

Run a payroll audit. Identify salaried staff in the band between $35,568 and $58,656 and confirm the duties test. Salary alone does not confer exemption; an employee must meet both the salary level and the duties test to qualify for the white-collar exemption.

Update timekeeping and overtime procedures for anyone who shifts back to non-exempt status. Communicate carefully: employees who lose exempt status sometimes read the change as a demotion even when their pay does not drop. Frame the conversation around compliance, not compensation philosophy.

Then watch the Federal Register. A replacement rule is coming, and the threshold will likely climb again.

The overtime question is not settled. It is merely resting between rounds.