This past April, the Biden administration announced a final rule updating overtime exemption thresholds under the Fair Labor Standards Act (FLSA).
The new rule was designed to expand overtime protections “for millions of the nation’s lower-paid salaried workers” by increasing the salary thresholds required to exempt a salaried bona fide executive, administrative or professional employee from federal overtime pay requirements,” according to the U.S. Department of Labor (DOL).
This change went into effect on July 1, with experts saying that the new rule figures to have a meaningful impact on public sector employers.
When the provisions were announced this spring, many also predicted that the rule would almost certainly have legal hurdles to clear.
“The new rule is likely to face legal challenges arguing that, like the Obama administration rule, it violates federal wage law by including many lower-paid supervisors and professionals who typically would not be eligible for overtime,” Reuters’ Daniel Wiessner wrote back in April.
It didn’t take long for Wiessner’s prediction to come to pass.
Just days before the new overtime law was set to take effect, a federal judge in Texas temporarily blocked the Department of Labor from enforcing the rule against the state of Texas as an employer.
On June 28, U.S. Eastern District of Texas Judge Sean Jordan ruled that the DOL overtime provisions wrongly determine eligibility for overtime pay based on a worker’s wage, rather than his or her job duties.
In doing so, Jordan relied upon the analysis of the Supreme Court in a momentous decision issued the very same day, which overturned the 40-year-old Chevron doctrine that had required lower courts to defer to federal agencies to interpret the laws those agencies enforce.
As employment law firm Ogletree Deakins noted, Texas sought a nationwide injunction, the court limited the relief to Texas as an employer. In granting the preliminary injunction, “the court noted the facts that the July 1, 2024 minimum salary increase will make 1 million employees across the country non-exempt, and [will] make another 3 million non-exempt” when the threshold increases again on Jan. 1, 2025.
The Texas lawsuit, filed on June 3, is one of three federal court challenges to the DOL final rule, wrote Keith Kopplin, a Milwaukee-based attorney with Ogletree Deakins, and Zachary Zagger, senior marketing counsel in the firm’s New York office.
On May 22, a group including more than a dozen Texas-based business groups filed a suit in the Eastern District of Texas, Kopplin and Zagger wrote, adding that, in addition to the preliminary injunction, the court in the Texas case consolidated those two lawsuits. A third suit, filed by software company Flint Avenue in the Northern District of Texas, is pending. In that case, the company moved for a nationwide preliminary injunction on June 12, 2024.
While the June 28 ruling precludes the DOL from enforcing the new overtime rule against the state of Texas as an employer, employers in other states should ensure they are conforming to the new provisions, according to Jackson Lewis attorneys, who pointed out that the DOL may ultimately appeal any adverse decisions, depending on the outcome of this year’s presidential election.
“For now, with the exception of the state of Texas, employers must comply with the new minimum salary floor,” they wrote, “raising the salaries of exempt employees who are paid below the new floor, reclassifying those employees as nonexempt, or limiting employee hours so they do not work overtime.”
02 July 2024
Category
HR News Article