A Texas federal judge has blocked a new U.S. Department of Labor (DOL) Rule that would have allowed certain workers making less than $58,656 per year to automatically become eligible for overtime premium pay if they worked more than 40 hours per week. Judge Jordan ruled that the DOL lacked the authority to implement this Rule, which would have changed the overtime eligibility for approximately four million people.
The court specifically criticized the DOL’s approach, stating that the updated salary threshold “effectively eliminates” the traditional duties test for determining overtime eligibility—replacing it with a “salary-only” approach. This follows a prior ruling in June, in which the same judge blocked the first phase of the 2024 Rule from applying to public employers in Texas.
The 2024 Rule Overview
The 2024 Rule sought to raise the minimum salary threshold for overtime eligibility through a two-phase process:
Phase One: Effective July 1, 2024, the threshold increased to $43,888 annually (or $844 weekly).
Phase Two: Scheduled for January 1, 2025, the threshold would have risen to $58,656 annually (or $1,128 weekly).
Automatic Updates: The Rule also proposed triennial adjustments to the salary threshold.
However, with the rule now blocked, the salary threshold set by the 2019 regulations—$35,568 annually ($684 weekly)—remains in effect.
Employer Considerations
The nationwide injunction leaves employers facing critical questions about how to proceed:
Communications: Have you informed employees about the salary increases as a one-step or two-step process?
Second Increase: If you’ve implemented only the first increase (effective July 1, 2024), you may lawfully hold back on the second increase. However, be prepared to explain your decision to employees.
Rollbacks: While it is possible to rescind the salary increase from July 1, 2024, employers should weigh the impact on employee morale and workplace trust.
Should you have any questions or concerns about registering your business in another state, please reach out to Derek Saunders, Keith Strahan, or Richard Armstrong of our firm, shown here: https://lfbrown.law/our-team
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