Texas Court Strikes Down Department of Labor Overtime Regulation

On November 15, Judge Sean Brown, of the U.S. District Court for the Eastern District of Texas, struck down the U.S. Department of Labor's overtime rule, Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees, which the Department announced April 23.

The rule concerns the so-called "white collar" overtime exemptions under the federal Fair Labor Standards Act (FLSA). It established a two-step increase in the annual salary that must be paid for executive, administrative and professional employees to be classified as exempt from overtime. The first increase took effect July 1 (rising from $35,568 per year to $43,888 per year), and the second was scheduled to take effect January 1 (rising to $58,656 per year).

LeadingAge submitted comments to the Department in November 2023, during the rulemaking process, expressing concern about the impact of the aggregate two-fold increases to the minimum salary level and urging the Department to advance a smaller increase, but the final rule did not waver from the proposal.

A number of business groups, as well as the state of Texas, challenged the legality of the final rule, and Judge Brown's recent decision resolves these consolidated cases in the plaintiffs' favor. The decision concludes that the Department of Labor exceeded its statutory authority under the FLSA and vacates the rule on a nationwide basis.

LeadingAge will provide additional analysis in the coming days.