Alert – Overtime Rule Update

A new lawsuit has been filed challenging the Department of Labor’s (DOL) overtime rule that significantly raises the salary threshold for the executive, administrative and professional employees (“white-collar”) overtime exemption. The first phase of the rule goes into effect on July 1, and this new lawsuit offers the potential for a delay of that date.   

On June 3, 2024, the State of Texas filed a lawsuit in a federal court for the Eastern District of Texas, arguing that the overtime rule is unconstitutional as applied to the states and that the DOL lacked authority to add a minimum salary requirement to the white-collar exemption. Texas also filed a motion for a temporary restraining order, and a hearing is scheduled for June 24, 2024. Texas will undoubtedly ask the court at the hearing to stop the new overtime rule from going into effect on July 1. 

It is also possible that the Texas case will be consolidated with an earlier lawsuit filed in the same court by the Associated Builders and Contractors, the American Hotel and Lodging Association, the National Retail Federation, and others. If the matters are consolidated, it is unclear whether the June 24 hearing will also address the challenges raised by these parties. 

Additionally, another lawsuit has been filed against the DOL by the New Civil Liberties Alliance on behalf of a small software company, Flint Avenue, LLC. The plaintiff in this case argues that the rule was improperly issued by Acting Labor Secretary Julie Su before she was confirmed by the U.S. Senate, and that it exceeds the DOL’s statutory authority and violates the Administrative Procedure Act as well as the U.S. Constitution. This case was filed in a federal district court in the Northern District of Texas on June 3, 2024. 

We are closely following these cases and will keep you posted on developments. If you have questions, please contact a KZA attorney. 

KZA Employer Report articles are for general information only; they are not intended and should not be construed to be legal advice. Reading or replying to such articles does not establish an attorney-client relationship. In addition, because the subject matters and applicable laws discussed in Employer Report articles are often in a state of change and not always applicable to every type of business entity or organization, readers should consult with counsel before making decisions based on the same.