Texas Judge Suspends Enforcement of New DOL FLSA Overtime Rule

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On July 1, 2024, the U.S. Department of Labor (DOL) implemented an increase in the minimum salary threshold for the Fair Labor Standards Act’s (FLSA) white-collar exemption, raising it from $35,568 to $43,888 annually. This threshold is set to increase further to $58,656 on January 1, 2025. Since the new rule became active, it has elicited mixed reactions and has faced legal challenges.

The impact of the increase in the salary threshold is not limited to non-government contracts. FLSA overtime requirements can apply to contracts covered by the Davis-Bacon Act and Service Contract Act and work in conjunction with the Contract Work Hours and Safety Standards Act.

In particular, the state of Texas recently filed for a preliminary injunction against the new rule, arguing that it would significantly raise payroll costs and strain budgets. In response, on June 28, 2024, a federal judge in Texas granted a preliminary injunction, suspending the DOL’s ability to enforce the new rule against Texas as an employer. Despite this injunction, private sector employers and other states must comply with the updated threshold.

While Texas state employers are temporarily exempt from the new salary threshold, employers in other states must comply and adjust their payroll practices. Further legal developments could influence the enforcement of the rule in the future.