Simon Abrams, Unsplash

The clock is quickly ticking down to July 1, when the U.S. Department of Labor’s new rule increasing the minimum salary for many employees to be considered exempt from overtime under the Fair Labor Standards Act is supposed to take effect. When a similar rule was supposed to take effect back in 2016, the clock was paused at the last moment by a federal judge in Texas, who found that the DOL exceeded its authority under the FLSA by making salary rather than job duties the controlling factor for whether an employee is an exempt executive, administrative, or professional employee. The 2016 rule never took effect, although the DOL approved a smaller increase to the minimum salary level in 2019, to the current $684 per week.

This past Monday, June 24, 2024, another federal judge heard arguments on a motion to block implementation of the DOL’s new rule in State of Texas v. United States Department of Labor, et al. In comments during the hearing, Judge Sean D. Jordan reportedly expressed skepticism about the new rule, suggesting that a repeat of 2016 may well be in the works. Judge Jordan has yet to issue a ruling but could do so at any time.

So what should employers do in the meantime? As in life, nothing is certain in litigation. Until we know for certain that the rule will be enjoined, employers should assume that it will take effect on July 1. If it does, employees with salary levels below the new minimum of $844 per week (increasing again to $1,128 per week effective January 1, 2025) either need to be paid more or reclassified as non-exempt.

Stay tuned for further updates.