Legal Update: Federal Court Set Aside FLSA Final Overtime Rule
The U.S. District Court for the Eastern District of Texas vacated the Biden administration’s overtime rule on Nov. 15. In its ruling, which applies nationwide, the court criticized the rule’s rise in the salary threshold level as displacing the duties test for the white-collar exemptions by being too steep.
In addition, the court struck down the automatic increases in the salary threshold every three years that the rule had set in place, finding that this violated the notice-and-comment period requirements of the Administrative Procedure Act.
The court concluded that the 2024 rule was not based on a permissible construction. Like the 2016 rule’s attempt to dramatically increase the minimum salary level from the 20th to the 40th percentile of full-time, salaried workers in the South, the 2024 rule mandated raising the minimum salary level for white-collar exemptions from the 20th to the 35th percentile—$58,656 annually—on Jan. 1, 2025.
US District Court in Texas Sets Aside Overtime Rule
SHRM | Nov 2024
How Should Employers Respond Now that Overtime Rule Is Blocked?
SHRM | Nov 2024
Additional Law Firm Articles
On November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated and set aside the U.S. Department of Labor (DOL)’s final regulation increasing the salary threshold for the “white collar” overtime exemption under the Fair Labor Standards Act (FLSA) on a nationwide basis.
The court held that each of the three components of the rule exceeded the DOL’s statutory authority under the FLSA. And given the nationwide scope of the rule, it concluded that the rule is struck down on a nationwide basis. The court had previously enjoined enforcement of the rule against the State of Texas in its capacity as an employer of state employees; its final decision now vacates the rule for all employers nationwide.
Federal Court Strikes Down Rule Raising Salary Threshold for White Collar Overtime Exemptions
Littler | Nov 2024
Federal Judge Blocks $44k and $59k Overtime Rule Nationwide: The 6 Questions Employers Should Answer to Plan Immediate Next Steps
Fisher Phillips | Nov 2024
SHRM Resources
Toolkit: Understanding Overtime Exemptions Under the FLSA
Flow Chart: FLSA Exemption Flow Chart
Overview: What You Need to Know About Overtime Pay
Resource Page: FLSA Overtime Rule Resources
Federal Overtime Rule Blocked for State Employees in Texas- June 2024
The new federal overtime rule was blocked from applying to employees of the state of Texas on June 28, just days before the rule’s first increase to the salary threshold was to take effect on July 1.
For all other employers in Texas and around the U.S., the rule takes effect in two phases of raising the salary threshold for white-collar exemptions from overtime requirements: first from $35,568 per year ($684 per week) to $43,888 per year ($844 per week) on July 1 and then to $58,656 per year ($1,128 per week) on Jan. 1, 2025. There are to be further automatic increases to the salary threshold every three years, starting July 1, 2027
In the decision, the U.S. District Court for the Eastern District of Texas stated that the 2024 rule reflects a return to the “unlawful approach” the U.S. Department of Labor (DOL) adopted in the 2016 rule, which the district court halted.
Overtime Rule Is Blocked for Texas State Employees
SHRM | Jul 2024
Challenges Filed - May 2024
On May 22, 2024, more than a dozen business groups and a company filed a lawsuit seeking to block the U.S. Department of Labor’s (DOL) new final rule that significantly raises the minimum salary thresholds for the Fair Labor Standards Act’s (FLSA) white-collar overtime exemptions and will require employers to either provide salary increases to millions of exempt workers across the country, or reclassify them so they are eligible for overtime.
Business Groups File Lawsuit to Block DOL’s Raised Salary Thresholds for White Collar Overtime Exemptions
Ogletree | May 2024
Déjà vu All Over Again: The DOL Overtime Rule Faces Legal Challenge
Seyfarth | May 2024
Original Development: SHRM and Law Firm Articles
Under the new rule, the total annual compensation requirement for HCEs will increase from $107,432 per year to $132,964 per year on July 1 and will rise to $151,164 per year on Jan. 1, 2025. Earnings thresholds will be updated every three years starting July 1, 2027.
Prepare for FLSA’s New Salary Thresholds for Highly Compensated Employees
SHRM | May 2024
Employers with exempt employees making less than the new minimum salary requirements for exempt workers will need to decide whether to raise salaries or reclassify employees as nonexempt. HR should consider the economic and morale impacts of reclassification.
Overtime Rule: Raise Salaries or Reclassify Employees?
SHRM | May 2024
Employees Making Less than $58,656 May Now Be Eligible for Overtime
SHRM | Apr 2024
10 Steps Employers Can Take Now to Prepare for $59k Salary Floor
Fisher Phillips | Apr 2024
Department of Labor Publishes Final Rule to Update the Salary Level for Overtime Eligibility
Littler | Apr 2024
Read the Final Rule
Final Rule: Restoring and Extending Overtime Protections
DOL | Apr 2024
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