Texas Court Invalidates Overtime Rule

On November 15, 2024, the U.S. District Court for the Eastern District of Texas issued a nationwide order vacating the U.S. Department of Labor’s (DOL) 2024 Final Rule increasing the minimum salary levels for exempt employees under the Fair Labor Standards Act (FLSA).

Prior to the 2024 Final Rule, the minimum salary level was $684 per week (the equivalent of $35,568 per year) for the executive, administrative and professional (EAP) exemptions and $107,432 per year for the highly compensated employee (HCE) exemption. These thresholds had been in place since 2019.?

The 2024 Final Rule increased the minimum thresholds as follows:

• July 1, 2024:? $844 per week for the EAP exemptions and $132,964 per year for the HCE exemption
• January 1, 2025: $1,128 per week for the EAP exemptions and $151,164 per year the HCE exemption
• Automatic increases every three years beginning in 2027

In vacating the 2024 Final Rule, the Court held that the DOL exceeded its authority by implementing: (1) a salary level so high that it effectively displaced the “duties” test that also must be met for an employee to qualify for exempt status, and (2) automatic increases that were not specifically authorized by the FLSA.

While it is possible that the DOL appeals the decision, with the impending change in administration, it is unlikely that the 2024 Final Rule will survive as originally implemented.

For now, employers may rely on the lower 2019 salary thresholds, which are reinstated as a result of the Court’s decision.

For further information, please contact:

Vincent Farisello

Partner

203.578.4284

[email protected]

Sarah Healey

Partner

203.578.4225

[email protected]

Giovanna Tiberii Weller

Partner

203.575.2651

[email protected]

Nick Zaino

Partner

203.578.4270

[email protected]

Maria Laurato

Associate

203.784.3157

[email protected]

This information is for educational purposes only to provide general information and a general understanding of the law. It does not