That’s Right (You’re Not From Texas)

Darrell VanDeusen
Darrell VanDeusen

Happy July 1, 2024.   Today the DOL’s salary basis for exempt status goes up (see my May 9, 2024 for additional background on that).   But not for Texas state employees.  

This development reminded me of the Lyle Lovett song That’s Right (track 4 off the 1996 album The Road to Ensenada), his tribute to the state.  It’s a catchy tune, with the memorable and oft repeated refrain:  “That’s right you’re not from Texas . . . But Texas wants you anyway.”

Unless you’re the DOL.  As discussed in my May 9 blog, the FLSA salary threshold is raised to $43,888 ($844/week) today.  This means that individuals who make less than that amount (on a 40 hour/week basis) will be entitled to overtime even if they are in a job that is otherwise exempt.  Another increase is scheduled for January 1, 2025.

Last Friday, Judge Jordan of the Eastern District granted the Lonestar State’s request for an injunction to stop the increase from occurring for any state employees.  Texas estimated about 100 employees would be impacted but claimed more broadly that the rule would result in fewer jobs for state employees and cuts to other state services.  State of Texas v. DOL, No. 4:24-cv-00499 (E.D. Tex. 6/28/24).

The Judge also consolidated the case with another challenge filed by more than a dozen business groups.   Meanwhile, another    lawsuit challenging the rule is pending in the Northern District of Texas, Flint Avenue LLC v. DOL, No. 5-00130 (N.D. Tex) complaint filed 6/3/24.

It’s not the first time the Eastern District of Texas has played spoiler on this topic.  In late 2016, and then in early 2017, Judge Mazzant first preliminarily and then permanently enjoined the DOL from increasing the FLSA’s salary basis.  See Nevada v. DOL, 218 F. Supp. 3d 520 (E.D. Tex. 2016) and Nevada v. DOL, 275 F. Supp. 3d 795 (E.D. Tex. 2017).

In granting the State’s request for a preliminary injunction this time, Judge Jordan said that “Texas is likely to succeed in showing that the 2024 Rule is an unlawful exercise of power, Texas will be irreparably harmed absent an injunction, and the balance of equities and the public interest favor preventing unlawful agency action.”

This ruling, while limited to a very few public employees in one state, is a setback to the DOL.  Returning to my May 9 blog, it is like Déjà vu all over again. Nationwide, employers need to make immediate adjustments to employee wages or treat employees who make less than $844/week as non-exempt, entitled to overtime.

The takeaway here?  Employers need to pay close attention to developments in this area.  Things are moving quickly and mistakes costly.

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