In an April 2024 final rule that abruptly took effect July 1, 2024, entitled Defining and Delimiting the Exceptions for Executive, Administrative, Professional, Outside sales, and Computer Employees, the Department of Labor amended the Fair Labor Standards Act to require a higher standard salary level for those employees exempt from the Act’s minimum wage and overtime protections (the “Final Rule”).[1] In doing so, the Department of Labor increased the minimum weekly salary threshold from $684 per week ($35,568/year) to $844 per week ($43,888/year), with additional increases in January of 2025 ($1,128/week or $58,656/year), July 1, 2027, and every three years thereafter.

Unsurprisingly, challenges to the Final Rule started rolling into federal courts across Texas. See Plano Chamber of Commerce, et al. v. U.S. Dep’t of Labor et al., No. 4:24-CV-00468-SDJ (E.D. Tex. 2024); see also State of Tex. v. U.S. Dep’t of Labor, et al., No. 4:24-CV-00499-SDJ (E.D. Tex. 2024); Flint Ave. LLC v. U.S. Dep’t of Labor, et al., 5:24-CV-00130-C. On June 28, 2024, Judge Sean Jordan of the Eastern District of Texas issued a limited injunction that partially blocked the Final Rule from going into effect and further consolidated the two cases before that court—Plano Chamber of Commerce and State of Texas. While the injunction was limited to the State of Texas as the employer, both Judge Jordan and Judge Cummings in the Northern District of Texas ordered expedited summary judgment briefing in their respective cases, thereby leading to the reasonable assumption that a merits-based decision on the enforceability of the Final Rule would be reached before the January 1, 2025 salary increase.

On November 15, 2024, the much-anticipated ruling was handed down in the Eastern District of Texas. In striking down the Final Rule, the Court held that “the Department [of Labor] exceeded the authority delegated by Congress” to “define and delimit the [FLSA’s executive, administrative, and professional exemption’s] relevant terms.” State of Tex. and Plano Chamber of Commerce, et al., No. 4:24-CV-00499-SDJ (Dkt. #76 at pp. 30, 39). The Court further noted that an “employee’s status [must] turn on duties—not salary[,]” and the Final Rule impermissibly “make[s] salary predominate over duties for millions of employees[.]” Id. at p. 39.

So what happens now? The Final Rule is set aside and vacated, and the January 1, 2025 salary increase (and any increase thereafter) will not go into effect.

[1] https://www.federalregister.gov/documents/2024/04/26/2024-08038/defining-and-delimiting-the-exemptions-for-executive-administrative-professional-outside-sales-and (last accessed November 15, 2024).