Limited Injunction Issued Against DOL’s Updated Salary Thresholds for Overtime Eligibility

by: Alan Lin

Earlier this spring, we highlighted the U.S. Department of Labor’s (DOL) new Final Rule increasing the minimum salary thresholds for certain exempt employees (“2024 Rule”).  As you likely know, one month after the DOL issued the 2024 Rule, it was challenged by a coalition of employer groups and business associations in the Eastern District of Texas.  Previous client alerts addressing these developments, which discuss the timing and amount of these increases, can be found here and here.

Limited Injunction Issued

Late in the afternoon of Friday, June 28, 2024, just days before the 2024 Rule was to take effect, a federal judge in the Eastern District of Texas enjoined significant parts of the 2024 Rule from taking effect in a case brought by the state of Texas (the state of Texas had filed its own lawsuit in the Eastern District of Texas challenging the DOL’s 2024 Rule).  The Court concluded that Texas is likely to succeed in showing that the DOL exceeded its statutory authority in promulgating increases in minimum salary thresholds for executive, administrative, and professional (EAP) employees.  The Court found that the 2024 Rule effectively implemented a “salary-only” test, eliminating the duties test used to determine whether an EAP employee is properly designated as exempt from federal overtime requirements.

A couple of important points regarding this decision:

  • This is a narrow injunction and is limited only to the state of Texas in its capacity as an employer; no other private employer or public entity (in Texas or otherwise) is included.
  • The injunction only applies to the increases in minimum salary thresholds for determining whether an employee is properly designated as exempt under the FLSA’s EAP exemptions. The Court did not enjoin the provisions of the 2024 Rule applicable to highly compensated employees.

What does this mean for your business or organization? 

Was the preparation your HR department undertook to make sure it complied with the 2024 Rule all for nothing?  No.  Unless you are working for the state of Texas, this limited injunction currently does not apply to you, meaning that the 2024 Rule, including its minimum salary threshold increases for employees designated as exempt under the EAP exemption, takes effect for your organization as of July 1, 2024.

However, this decision does perhaps foreshadow future decisions involving the 2024 Rule.  Indeed, there are two other pending legal challenges to the DOL’s 2024 Rule, both of which are filed in Texas.  Another lawsuit, filed in the Northern District of Texas by a private software company, specifically requests nationwide injunctive relief (which would affect all employers if granted).  It remains to be seen whether such an injunction will be issued, but as of July 1, 2024, it has not and the 2024 Rule is effective.

Stay tuned.  With multiple challenges still pending, we anticipate that the landscape surrounding the DOL’s new salary thresholds is likely to change yet again (and probably sooner rather than later) before the second set of increases set to take place on January 1, 2025.  However, because no nationwide injunction has been issued and the 2024 Rule remains enforceable against nearly all employers, our clients should proceed with implementing any planned changes to ensure they are in compliance with the increases in minimum salary thresholds.  We also recommend continuing to evaluate your workforce and payroll in preparation for January 1, 2025—but with the understanding that the law may change again before then.  Our Firm will continue to monitor further developments and keep you informed. Do not hesitate to reach out to any of us with questions.