Texas Federal Court Blocks Rule Raising Salary Threshold for White Collar Exempt Employees

By Shiloh Theberge and Bill Wahrer

In February, we issued an announcement alerting clients to  the U.S. Department of Labor’s (“DOL”) long-awaited rule regarding the new salary levels for the administrative, professional, executive, and highly compensated employee exemptions under the Fair Labor Standards Act (“FLSA”).

Under that rule, effective July 1, 2024, the administrative exemption’s salary threshold increased to $43,888 annually.  The rule also raised the overtime salary threshold for highly compensated employees to $132,964 effective July 1, 2024.  The rule also provided that these salaries would again rise significantly effective January 1, 2025.

What’s Happening

As expected, the DOL’s rule was subject to litigation in which litigants argued that the DOL lacked the authority to raise these salary thresholds.  A judge in the United States District Court for the Eastern District of Texas agreed with these litigants; on Friday, November 15, the court granted their request to issue an injunction against the DOL from implementing and enforcing this rule.  Originally, the Court’s request to enjoin the DOL was specific only to those litigants; however, last week, the Court expanded the injunction to apply on a nation-wide basis and vacated the rule.  As a result, the DOL’s rule is presently without effect and the DOL is blocked from enforcing it.

Next Steps for Employers

An appeal from the DOL is more than likely and it may be months before we know the ultimate fate of the DOL’s rule.  In the meantime, we encourage businesses to reach out to their legal counsel for any questions regarding the impact on their businesses and their employees.

For additional information or guidance related to this decision, contact Shiloh Theberge at stheberge@bernsteinshur.com or Bill Wahrer at wwahrer@bernsteinshur.com today.