With the November 15, 2024 ruling by the United States District Court for the Eastern District of Texas (District Court, E.D. Texas) that the new rule governing overtime pay to employees, issued on April 23, 2024 by the U;S. Department of Labor (DOL) was unconstitutional, and banning its implementation nationwide, this issue may be a dead letter.

However, the DOL has filed a Notice of Appeal to the U.S. Court of Appeals for the Fifth Circuit with District Court, E.D. Texas as of November 26, 2024, so it may be too soon to write the rule off just yet.

Background

Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees was issued on April 23, 2024, as noted above, and published April 26, 2024), was to take effect on July 1, 2024.

The new rule streamlined the testing procedures for determining the overtime exemption for executive, administrative, and professional (EAP) personnel, as well as those for highly compensated employees (HCE).

This rule also increased the salary thresholds for EAP and HCE workers, from the then-current $35,568 and $107,432 to $43,888 and $132,964, respectively. These thresholds were to be effective from July 1, 2024, through December 31, 2024, only – as of January 1, 2025, they would increase to $58,656 for EPA personnel and $151,164 for HCEs.

As was to be expected, several lawsuits against the DOL rule were filed. In one of these, State of Texas v Department of Labor, et. al., District Court Judge Sean D. Jordan of the District Court, E.D. Texas, granted the State of Texas’ Request for Preliminary Injunction against the DOL on June 28, 2024, blocking the overtime rule’s taking effect on July 1, 2024 – but only in the State of Texas.

The Principal Lawsuits

The principal lawsuits filed in opposition to the overtime rule were:

Plano Chamber of Commerce, et. al., v Su, et. al.
Full title: Plano Chamber of Commerce; American Hotel and Lodging Association; Associated Builders and Contractors; International Franchise Association; National Association of Convenience Stores; National Association of Home Builders; National Association of Wholesaler-Distributors; National Federation of Independent Business, Inc.; National Retail Federation; Restaurant Law Center; Texas Restaurant Association; Cooper General Contractors; Dase Blinds, Plaintiffs, v Julie Su, Acting Secretary, United States Department of Labor, in her official capacity; Jessica Looman, Administrator, Wage and Hour Division, U.S. Department of Labor, in her official capacity; and United States Department of Labor, Defendants.

This case was filed on May 22, 2024, in the Sherman Division of the District Court, E.D. Texas. On July 28, 2024, it was consolidated with the below case:

State of Texas v Department of Labor, et. al.
Full title: State of Texas Plaintiffs, v United States Department of Labor, Julie A. Su, in her official capacity as United States Secretary of Labor, the Wage and Hour Division of the Department of Labor and Jessica Looman in her official capacity as Administrator of the Wage and Hour Division, Defendants.

Like Plano Chamber of Commerce, et. al., v Su, et. al., State of Texas v Department of Labor, et. al. was filed in the Sherman Division of the District Court, E.D. Texas (on June 3, 2024). That being the case, and since both suits concerned similar matters of law, he two cases were consolidated on June 28, 2024 by District Court Judge Sean D. Jordan on the same day he granted and issued the preliminary injunction in the State of Texas case.

Again, Judge Jordan ruled on November 15, 2024, in these consolidated lawsuits that the new overtime rule violated the Constitution and vacated it altogether.

And the DOL filed its Notice of Appeal to the U.S. Court of Appeals for the Fifth Circuit with District Court, E.D. Texas as of November 26, 2024,

The remaining principal case is:

Flint Avenue LLC v U.S. Department of Labor et al.
Full title: Flint Avenue, LLC, Plaintiff, v. U.S. Department of Labor; Julie Su, Acting Secretary, U.S. Department of Labor, in her official capacity; Jessica Looman, Administrator, Wage and Hour Division, U.S. Department of Labor, in her official capacity, Defendants.

This case was filed on June 3, 2024, in the United States District Court for the Northern District of Texas Lubbock Division.

In this case, Senior U.S. District Court Judge Sam R. Cummings denied Plaintiff’s Request for Preliminary Injunction on July 1, 2024 – although this refusal was, at least to some extent, a non-issue, since the June 28, 2024 preliminary injunction issued in the State of Texas case barred the rule’s enforcement in Texas.

While the Flint Avenue case is officially still pending, it is likely to hold fire until and unless a determination is made in the Fifth Circuit with respect to the State of Texas case.

Does the Overtime Rule Have a Future?

We don’t think it’s very likely that the Fifth Circuit will reverse Judge Sean Jordan’s ruling in State of Texas v. Department of Labor, et. al. before January 20, 2025, and a new administration takes the reins of the DOL along with the rest of the federal government.

Normally, we would not expect an incoming Trump administration to defend a rule expanding mandatory overtime pay. In his first administration, President Trump’s DOL declined to defend a related rule concerning overtime issued by President Obama.

However, in 2024, candidate Trump made some very labor-friendly proposals, including one which would exempt overtime pay from federal income taxes. So, we don’t think it’s quite safe to predict the stance he will take with regard to this overtime rule.

For now, though, employers can breathe easier, knowing the rule has, for now, been struck down.

If you have any questions concerning overtime pay, or if there is anything else we can help you with, please click here to email me directly. RFG is here to help you – that’s our passion and our reason for existing.

Until next time –

Peace,

Eric