On August 31, 2017, a federal district court in Texas officially struck down the overtime rule issued by the Obama administration, which would have substantially increased the salary threshold for millions of employees to be exempt from receiving overtime pay under the Fair Labor Standards Act ("FLSA"). According to the FLSA, employees are not entitled to overtime, if they earn a certain minimum salary and perform certain duties to be considered an executive, administrative or professional employee. The rule would have increased the salary threshold for employees to $47,476 annually, more than double the current salary level of $23,660. Companies would have had to pay overtime pay to approximately 4 million additional employees who earn less than the new salary threshold. The rule was going to take effect on December 1, 2016, but the same federal district court, on November 22, 2016, issued an injunction to prevent the rule from going into effect. After the ruling in November, the case continued and in its ruling on August 31, 2017, the court issued an order invalidating the proposed overtime rule. The court decided that the new rule raised the salary threshold so high that there would be no need for an analysis of the employee's job duties. Therefore, the government went too far in setting the salary threshold.
This court's decision has officially put an end to the longstanding speculation whether if and when the rule would ever become effective. However, although the court struck down the rule, the Trump administration may still reevaluate the salary level and raise the salary threshold.