As discussed in a prior alert, the U.S. Department of Labor (USDOL) promulgated a new rule on April 23, 2024, to expand the group of salaried employees covered by the Fair Labor Standards Act’s (FLSA’s) overtime protections by raising the threshold annual amount that employees covered by the FLSA must earn to meet the salary part of the exemption test and receive overtime pay. The rule was expected to go into effect as of yesterday, July 1, 2024. As expected, there have been legal challenges, including requests for injunctive relief, to the USDOL’s new rule, with varied success. Two of these challenges have been decided in the past few days.
On June 28, 2024, the U.S. District Court for the Eastern District of Texas in Texas v. U.S. Dep’t of Labor found the State of Texas was likely to succeed on the merits of its legal challenge of the April 23, 2024, USDOL rule and was therefore entitled to injunctive relief. However, the court limited the relief to employees of the State of Texas and did not extend any injunctive relief to private businesses or to any other state.
On July 1, 2024, the U.S. District Court for the Northern District of Texas in Flint Avenue, LLC v. U.S. Dep’t of Labor denied the plaintiff’s request for a nationwide preliminary injunction and held that, based on the facts of the case at issue, the question of whether the DOL has the authority to promulgate any of the exemption pay amounts should be addressed at the summary judgment stage. The court held that—before the threshold amount is raised again on January 1, 2025—the court would have sufficient time to address the merits of the plaintiff’s claims.
Bottom Line: Outside of public employers in the State of Texas, the USDOL rule is now in effect. Employers will need to prepare to increase salaries or change exempt classifications for those employees who will not meet the threshold salary required by the new rule. Employers will also need to look ahead and conduct an analysis to prepare for the second salary threshold increase on January 1, 2025. This is an emerging issue.
Connell Foley will continue to monitor court opinions and agency regulations and announcements for any forthcoming guidance on the FLSA’s overtime protections. Please contact an employment attorney at Connell Foley with questions regarding these or any of the other legal changes.
