Dive Brief:
- A Texas federal judge on Friday struck down the U.S. Department of Labor’s recently expanded overtime rule nationwide, stripping overtime eligibility from an estimated 1 million workers, according to a court filing.
- U.S. District Court Judge Sean Jordan ruled that “the 2024 Rule exceeds the Department’s authority and is unlawful.” The ruling vacates DOL’s overtime rule that changed the threshold at which workers qualified for overtime from $35,568 to $43,888 effective July 1 and would have raised it to $58,656 on Jan. 1, 2025, according to Littler attorneys.
- Jordan previously granted a preliminary injunction to the Texas state government days before the rule was to go into effect.
Dive Insight:
The Fair Labor Standards Act requires employers to pay employees overtime for working more than 40 hours in a week but it exempts some executive, administrative, and professional (EAP) workers. To be exempt, workers must be salaried, their work must fit EAP duties and they need to earn a minimum salary, Littler attorneys said.
Jordan ruled that by setting the salary threshold as high as it did, DOL created a “de facto ‘salary only’ test for the EAP exemption,” which exceeded the department’s authority, Littler attorneys said.
The ruling also vacated what Littler attorneys called the rule’s automatic “escalator” provision, which would have increased the salary threshold every three years.
Despite the ruling, Littler attorneys warned employers to check with counsel before rescinding changes made in response to the July 1 salary threshold increase and noted that some states, including California, New York and Washington, have salary thresholds that exceed the FLSA threshold.
Littler attorneys Maury Baskin, Jim Paretti and Rob Friedman represented a coalition of businesses and trade associations that challenged the overtime rule.