As covered in our April 2024 blog and client alert, the US Department of Labor has unveiled a new rule, substantially increasing the salary threshold for exemptions to mandatory time-and-a-half overtime, that is set to take effect one week from today, on July 1, 2024.  Despite this tight timeline, employers still don’t have clarity on whether the rule will go into effect as planned—or will be blocked by pending litigation.  In the grand legal tradition of “hurry up and wait,” this leaves employers in a potentially difficult position.  Here’s a summary of where things stand (as of today) and what might be coming next. 

The Rule (in a nutshell)

The rule sets up two initial increases to the salary threshold for “white collar” exempt workers.  First, on July 1, 2024, the threshold will increase to $844/week ($43,888 per year).  Second, on January 1, 2025, that number will bump up to $1,128/week ($58,656 per year).  see our prior blog and the DOL’s own summary table for more details.

Pending Litigation

There are several cases pending that might impact whether the rule goes into effect as planned.  Two of those cases (one filed by the Plano, TX Chamber of Commerce and several business groups, the other filed by the TX Attorney General) are now pending in the Eastern District of Texas – the same court that blocked a similar DOL rule in 2016.  Yet another case is on appeal before the Fifth Circuit Court of Appeals, regarding a 2022 lawsuit challenging the DOL’s ability to set a salary threshold in the first place.  Several Supreme Court Justices have suggested that they might agree with that position.  This is notable because if the salary threshold were to be abolished, overtime eligibility would depend entirely on more fact-specific duties tests, without employees and employers being able to rely on more bright-line salary rules.

A hearing took place this afternoon in one of the Texas cases, but no decision has been rendered yet.  Because the rule may be effective five business days from the date this blog is published, employers still need to be prepared for the rule to go into effect—which may require companies to reclassify employees, shift job duties, or even provide salary increases to avoid later misclassification claims.

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