The U.S. Department of Labor's (DOL) final rule (2024 Overtime Rule) revising the federal Fair Labor Standards Act (FLSA) exemption from minimum wage and overtime pay requirements for executive, administrative and professional (EAP) employees has officially been challenged. In a prior alert, we explained how the DOL's 2024 Overtime Rule will significantly increase the standard salary-level threshold on two separate dates and every three years thereafter for EAP employees. Litigation against the 2024 Overtime Rule was widely expected and, without fail, on May 22, 2024, several business and industry lobbying groups filed a lawsuit in the U.S. District Court for the Eastern District of Texas seeking to postpone the effective date of the DOL's recent Overtime Rule.
The complaint argues that the 2024 Overtime Rule disregards concerns raised by the business community and ignores the court's past legal decisions on the issue. Notably, a similar case was filed by the same group, in the same Texas court, after a comparable 2016 Overtime Rule sought to dramatically raise the minimum salary required for EAP employees to qualify as exempt. The Texas court declared the DOL's attempt to automatically increase the salary threshold on a triennial basis unlawful and permanently invalidated the 2016 Overtime Rule.
The current lawsuit argues the DOL's 2024 Overtime Rule will again "essentially make an employee's duties, functions, or tasks irrelevant if the employee's salary falls below the new minimum salary level," and will unlawfully "make salary rather than an employee's duties determinative of whether a 'bona fide executive, administrative, or professional capacity employee' should be exempt from overtime pay." The complaint warns that the 2024 Overtime Rule will inevitably lead to increased labor costs for employers who will be directly injured by the new regulatory requirements.
The lawsuit demands that the court postpone the 2024 Overtime Rule's effective date and ultimately vacate and set aside the rule to protect "countless employer members...across many industries, job categories, and geographic areas [that] will suffer irreparable harm from the loss of their employees' previously exempt status under the 2024 Rule."
While awaiting the outcome of this case, employers should continue to prepare for the 2024 Overtime Rule. If you have questions about the 2024 Overtime Rule, or how to prepare for it, please contact a member of the Labor and Employment Practice or your Reinhart attorney.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.