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Federal Court Denies Injunction Against New FLSA Overtime Exemption Salary Level

    Client Alerts
  • July 05, 2024

On Monday, a federal district court in Texas denied a request for a temporary injunction that would have prevented the Department of Labor’s increase in the minimum salary from taking effect for certain employees. The DOL’s new rule has been estimated to make approximately 4 million more employees eligible for overtime across the country. The rule, which became effective Monday, increased that minimum salary to $43,888 per year. A second increase, set to take effect January 1, would raise this minimum to $58,656.

The federal court denied the injunction because the plaintiff could not demonstrate irreparable harm from the increase. The court concluded that the employee offered as an example of a worker would need to be reclassified as non-exempt under the new salary rule, did not qualify as exempt even prior to July 1, and that there was no demonstration of quantifiable costs imposed on the employer.

The court did not make a substantive determination on the validity of the Fair Labor Standards Act rule, and could still rule in favor of the plaintiff with regard to the initial or subsequent salary increases. Also on Monday, a different Texas federal court issued a narrow injunction to prevent the new salary levels from taking effect with respect to Texas government employees. Although the judge expressed his opinion that the increase was legally invalid, the resulting injunction does not affect private sector employers or government ones outside of Texas.

These decisions mean that at least for now, employers need to comply with the first step of salary increases in order to continue claiming exemption from overtime requirements. Employers unwilling to increase salaries to this new minimum must reclassify affected employees as non-exempt, begin tracking hours worked, and pay overtime when the employee works in excess of 40 hours in a given workweek. The ultimate fate of this increase and the second one scheduled for next year will depend on the results of additional litigation.

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