DOL Overtime Rule Blocked by Federal Court in Texas

November 18, 2024 Advisory

On Friday, Nov. 15, the U.S. District Court for the Eastern District of Texas granted summary judgment against the U.S. Department of Labor, overturning the 2024 Overtime Rule in its entirety, with nationwide effect. Earlier this year, the DOL announced the 2024 Overtime Rule, which proposed to increase the minimum salary required for most exempt employees under the Fair Labor Standards Act on July 1, 2024, and again on Jan. 1, 2025, plus automatic updates thereafter in the future. The Court’s ruling on Friday affects both the previous change to $844 per week, already effective since July 1, which is now vacated, and forthcoming Jan. 1 change to $1,128 per week, which will not take effect as planned.

This order effectively reverts the minimum weekly salary requirement back to the 2019 number, $684 per week (except in jurisdictions, such as California and New York, which have higher minimum requirements under state law). In the months leading up to the July 1 increase, many employers reclassified workers as nonexempt. In theory, employees who were converted to nonexempt due to the July 1 increase may now be reclassified to exempt, if desired.

It is anticipated that the DOL will appeal this decision to the Fifth Circuit. However, any appeal most certainly will not be resolved by the Jan. 1 effective date of the next planned increase, and the new administration may ultimately abandon the appeal at a later date if it is still pending. The 2019 rule, which is now once again in effect, was issued under the previous Trump administration.

Key takeaways for employers at this time are:

The minimum salary for exempt status under federal law is once again $684 per week, with limited exceptions.
Employees who earned between $684 and $844 per week and were reclassified as nonexempt as a result may be reclassified as exempt, provided they continue to meet one of the applicable job duties tests.
The anticipated increase to $1,128 per week on Jan. 1, 2025, will not occur.
Any future revisions to the minimum salary remain to be seen.

The case is State of Texas, et al. v. United States Dept. of Labor, et al., No. 4:24-CV-499-SDJ.

If you have any questions specific to your organization, please contact your Armstrong Teasdale lawyer or the author of this advisory.