On June 28, 2024, a Texas federal judge issued an injunction temporarily blocking the U.S. Department of Labor’s (DOL) new overtime rule from taking effect for employees working for the State of Texas.  As discussed in a prior post, the DOL’s new overtime rule increases the minimum annual salary for overtime exempt status on July 1, 2024 from $35,568 to $43,888 ($844 per week), and again on January 1, 2025 to $58,656 ($1,128 per week). The legal challenge was brought by the State of Texas in Texas v. Dep’t of Labor, No. 4:24-cv-00499, before the United States District Court for the Eastern District of Texas. 

Despite the ruling’s limited scope — it only applies to employees of the state of Texas, not in Texas — it is the first major ruling issued after the Supreme Court published its decision in Loper Bright Enters v. Raimondo (June 28, 2024). Loper Bright overruled the decades-long standard of deference to rule making by federal agencies like the DOL, established in a 1984 Supreme Court decision, Chevron USA, Inc. v. Natural Resources Defense Council. Read Nelson Mullins Supreme Court Overrules Chevron to learn more about the Loper Bright decision, which is likely to impact the DOL’s rule making ability going forward.

Given the limited scope of the injunction in Texas v. Dep’t of Labor, most employers will be required to comply with the July 1 salary increase, and begin providing overtime pay to employees who earn less than $43,888 per year.  However, employers should closely monitor any legal challenges to the new overtime rule in the months leading up to the salary increase scheduled for January 1, 2025 — particularly in the wake of the Loper Bright decision. 

On July 1, 2024, the United States District Court for the Northern District of Texas, in Flint Avenue, LLC v. Su, No. 5:24-CV-130-C, denied a similar request for a preliminary injunction staying the July 1 salary increase. Yet, the court in Flint Avenue left open the possibility of an injunction in advance of the January 1, 2025 salary increase, noting that the Court would address the merits of the plaintiff’s claims that DOL lacked authority to promulgate the new overtime rule in advance of January 1, 2025.

Nelson Mullins summer associate Abigail Thomson assisted with writing this article.