Texas Court Strikes Down Federal Overtime Rule (Again)

For the second time in seven years, a federal court in Texas has struck down a U.S. Department of Labor (DOL) rule aimed at expanding the scope of overtime eligibility to workers across the country.  On November 15, 2024, in State of Texas v. United States Dep’t of Labor, Judge Sean D. Jordan of the United States District Court for the Eastern District of Texas ruled that the DOL exceeded its rulemaking authority by raising the minimum salary for exemption as an executive, administrative, or professional (EAP) employee under the Fair Labor Standards Act. 

Under the DOL’s rule, which was published in April 2024, the minimum salary for exemption as an EAP employee, with limited exceptions, increased from $684 per week ($35,568 annualized) to $844 per week ($43,888 annualized) effective July 1, 2024.  A second increase would have raised the salary threshold to $1,128 per week ($58,656 annualized) effective January 1, 2025.  The rule also increased the minimum total annual compensation level for exemption as a “highly compensated employee” (HCE)—one who customarily and regularly performs any one or more of the exempt duties or responsibilities of an EAP employee—from $107,432 to $132,964 effective July 1, 2024 and to $151,164 effective January 1, 2025.  The rule also provided for automatic triennial increases in the minimum salary for exemption as an EAP employee and the minimum annual compensation level for exemption as an HCE, tied to current earnings data, beginning on July 1, 2027.

Judge Jordan’s ruling vacates the entire rule, including the increases that took effect in July 2024.