New DOL overtime rule takes effect for millions (except for employees of the State of Texas)

A female office worker staying late, working overtime in a dark office

As we reported earlier this spring in the article, “Millions more U.S. workers to be eligible for overtime under final DOL rule,” the U.S. Department of Labor’s final rule raising the salary threshold for white collar workers went into effect today, affecting millions of workers nationwide.

Beginning July 1, 2024, workers who qualify for a white collar administrative, executive or professional exemption but who make less than $844 per week (or $43,888 annually) are now eligible for overtime pay for hours worked in excess of 40 per week. Additionally, the salary threshold for highly compensated employees also went up today, from $107,432 per year to $132,964 per year. Effective January 1, 2025, the FLSA regulations standard salary level for white collar exempt workers will increase again from $844 per week to $1,128 per week ($58,656 per year).

Court bans implementation for State of Texas employees only

As predicted, the DOL’s final rule was met with a legal challenge in federal court – this time by the State of Texas, which argued that the U.S. Department of Labor exceeded its authority in making the rule.  On June 28, 2024, the U.S. District Court for the Eastern District of Texas granted the State’s motion for preliminary injunction. The injunction is limited in scope, applying only to the State of Texas as a government employer. All other U.S. employers, including private employers in Texas, are subject to the new salary thresholds.

What’s next?

The injunction issued in Texas is temporary, and upon a final decision in the case, the court may expand the injunctive relief. Right now, the DOL rule is the law for employers. Additional court challenges may take place prior to the January 1, 2025 compliance date for the next salary jump, but employers should prepare as if those salary thresholds will go into effect as well.  Employers need to make sure that all exempt employees are receiving the updated salary amount or should re-classify those workers who are under the salary threshold as non-exempt.

For assistance in reviewing your current FLSA exemptions and the impact of this rule on your exempt workforce, please contact your McAfee & Taft Labor & Employment Group attorney.