Texas Federal Court Vacates Department of Labor’s New Overtime Rule

On November 15, 2024 a federal judge in Texas vacated the Department of Labor’s (DOL) overtime rule from April 2024. This Rule promulgated by the DOL sought to raise the Fair Labor Standards Act’s (FLSA) minimum salary thresholds for white-collar overtime exemptions.

U.S. hourly workers, unless subject to narrow exemptions, are entitled to overtime pay (over 40 hours/week) under the federal law. Many workers who are salaried are exempt from that requirement unless their salary is below a certain amount.

The Plaintiffs in the current matter argued that the DOL’s 2024 increase would have rendered the Executive, Administrative and Professional (“EAP”) exemption moot, as the salary-level increase under the 2024 increase would have already been above that of the salary-based inquiry as an alternative to the EAP exemption. Effectively, the Court stated that because the salary level minimum exemption was raised higher, making more employees overtime-eligible, the DOL was eliminating consideration of the EAP exemption, exceeding the DOL’s authority granted under law.  

On July 1, 2024, the minimum salary level was raised, per the rule, to the equivalent of $43,888 per year. The minimum salary level was also set to increase on January 1, 2025 to $58,656 per year.

This ruling invalidated the July 1, 2024 salary increase as well as the salary adjustments that had been included in the April 2024 rule by the DOL nationwide. The salary exempt status will go back to $35,568 per year, a result of the 2019 DOL rule. This ruling will most likely be appealed, stay tuned for further updates.

If your business has any questions on this topic or any other matters, please do not hesitate to contact the attorneys at The Royal Law Firm at 413-586-2288.