On November 15, 2024, a United States Eastern District Court in Texas struck down a 2024 Department of Labor (DOL) rule that would have made four million previously exempt workers eligible for overtime by 2025. In an action brought by the State of Texas and a coalition of business associations, the court held that the DOL exceeded its statutory authority under the Fair Labor Standards Act of 1938 (FLSA) by effectively reclassifying these employees as non-exempt based on their salaries without considering their job duties.  

The FLSA requires payment of overtime to employees working more than forty hours in a week but exempts certain executive, administrative, and professional employees. Under the FLSA, the DOL must periodically define and delimit which workers fall under these exemptions. In 1940 the DOL introduced a three-part test, which is still in place today, to determine whether an employee is overtime exempt: (1) the employee must be paid a predetermined, fixed salary; (2) the salary must be at a weekly rate above a minimum threshold set by the DOL; and (3) the employee must have executive, administrative, or professional job duties. The 2024 rule scheduled three increases to the minimum salary threshold, which previously was $684 per week: $844 on July 1, 2024; $1,128 on January 1, 2025; and automatic increases every three years starting in July 2027.Continue Reading Texas District Court vacates DOL rule expanding overtime eligibility