Texas Court Vacates Biden-Era Employee Exemption Rule

On November 15, 2024, the United States District Court for the Eastern District of Texas vacated the Department of Labor’s (“DOL”) 2024 Rule increasing minimum salary thresholds for the executive, administrative and professional minimum wage and overtime exemptions.  The Court’s earlier ruling in June vacated the rule only as to the State of Texas as an employer.  This most recent Court decision, however, applies nationwide and puts the DOL’s rule on hold for everyone.

The DOL’s rule would have made it harder for employers to claim minimum wage and overtime exemptions for certain executives, administrative and professional employees.  The rule’s higher compensation thresholds would have required employers to reclassify many previously exempt employees to non-exempt, making them eligible for overtime compensation.  The DOL rule’s first threshold adjustment had already gone into effect in July, 2024.  The rule would have increased the thresholds again in January, 2025 and automatically thereafter based upon contemporary earnings data.

The Texas Court ruled this month that the DOL had exceeded its authority make the changes to the exemptions and expanded its earlier injunction to cover all employers nationwide.  Not only did the Court block the rule as it applied to future threshold adjustments, but it also invalidated the change that had already gone into effect in July of this year.

The District Court’s decision could still be appealed, but the incoming Trump administration may be less willing to defend the rule.  In any event, the Fifth Circuit Court of Appeals would seem likely to agree with the lower court.  So, at least for now, it appears that the exemption salary thresholds will revert to pre-2024 levels.

For more information, please contact SS+D’s Labor & Employment Practice Group at 937-222-2052 or kulrich@ssdlaw.com.

This material is not intended as legal advice and is for general informational purposes only.  Those seeking legal advice should consult directly with legal counsel regarding their specific facts and circumstances.