A last minute court order has temporarily excluded those employed by the state of Texas from the U.S. Department of Labor’s final rule that extends overtime protections to millions of white collar workers across the nation.
The June 28 order granted the Texas government’s request for a preliminary injunction, halting the Department of Labor (DOL) rule as it applies to the Lone Star State as a government employer, while multiple lawsuits challenging the rule are ongoing.
The federal Fair Labor Standards Act requires that workers be paid overtime for all hours that are worked above 40 hours in a workweek. However, this requirement did not apply to salaried employees who primarily perform executive, administrative, or professional (EAP) duties and earn more than $35,568 a year, or $684 per week. These employees are known as EAP-exempt workers.
Under the new DOL rule, which came into force on July 1, EAP-exempt workers who earn less than $844 per week, or the equivalent of $43,888 per year, are now eligible for overtime pay for hours worked beyond 40 per week.
On Jan. 1, 2025, the threshold will increase to $1,128 per week, the equivalent of a $58,656 annual salary. The DOL also mandates that the salary floor be raised every three years based on up-to-date wage data.
The DOL estimates that the new regulation will make 4 million previously EAP-exempt workers eligible for overtime.
The State of Texas filed its lawsuit against the rule on June 3, claiming that the DOL overstepped its authority because the Fair Labor Standards Act defines the EAP exemptions based solely on the workers’ duties, not their salaries.
U.S. District Judge Sean Jordan of the Eastern District of Texas agreed with the argument, saying that a plain reading of the Fair Labor Standards Act seems to suggest that the DOL should not impose a salary minimum for the application of the EAP exemption.
“An examination of the ordinary meaning of the EAP Exemption’s undefined terms shows that the Exemption turns on an employee’s functions and duties, requiring only that they fit one of the three listed, i.e., ‘executive,’ ‘administrative,’ or ‘professional capacity,’” the judge wrote.
“Since the EAP Exemption requires that exemption status turn on duties—not salary—and the 2024 Rule’s changes make salary predominate over duties for millions of employees, the changes exceed the authority delegated by Congress to define and delimit the relevant terms,” he concluded.
In granting the preliminary injunction, Judge Jordan declined Texas’ request for a nationwide injunction but instead limited the relief to Texas as an employer.
“Here, the only party before the Court is the State of Texas, in its capacity as an employer, suing to prevent the 2024 Rule from going into effect,” he wrote. “Texas has put on evidence of its own injuries as an employer, but has not otherwise offered any evidence of injuries to other entities or individuals.”
This means that private employers in Texas, as well as all government and private employers elsewhere in the country, will still need to comply with the new salary threshold for the EAP exemptions.
The Texas lawsuit is one of three court challenges to the DOL final rule. Another lawsuit was filed in the Eastern District of Texas by a coalition of more than a dozen business groups. The court has consolidated these two cases.
A third challenge was brought by a public interest law firm on behalf of a software company in the Northern District of Texas. The DOL has contested the company’s standing, arguing that only one employee was possibly affected by the July 1 overtime rule change. No decision has been issued yet.
