By Jeyser "Jey" Claudio
On November 15, 2024, a federal court in Texas struck down the U.S. Department of Labor (“DOL”) rule that aimed to expand the scope of overtime eligibility to workers across the country. For certain executive, administrative or professional employees to be exempt from overtime pay, they must earn above a certain amount. The United States District Court for the Eastern District of Texas ruled that the DOL exceeded its rulemaking authority by raising the minimum salary threshold that would protect against overtime having to be paid under the Fair Labor Standards Act (“FLSA”). State of Texas v. United States Dep’t of Labor.
The DOL’s rule, published in April 2024, increased the FLSA salary threshold to $43,888.00 annually ($844.00 per week), up from $35,568 ($684 per week) and became effective July 1, 2024. Further, beginning January 1, 2025, the FLSA salary threshold would have increased to $58,656.00 annually ($1,128 per week). Additionally, in drafting the new rule, the Department of Labor recognized the need to update earnings thresholds regularly. As a result, the earning threshold will automatically increase every three (3) years beginning July 1, 2027. The automatic increases will be based on wage data at the time of the new earnings threshold.
Practical Takeaways
The recent ruling vacates the entire DOL rule, including the increases that took effect in July 2024. It is possible that the DOL could appeal the decision. In the meantime, the second salary threshold increase will not go into effect on January 1, 2025. Keep in mind that Congress or the new administration may view things differently next year.
For more information about this article, please contact Tressler attorney Jey Claudio at jclaudio@tresslerllp.com.