Federal Judge Strikes Down Overtime Rule

A federal district judge in Texas invalidated the Labor Department’s overtime rule in November that sought to raise the minimum salary level that white collar employees must be paid to remain exempt from overtime pay. The ruling applies both to the higher salary level test that went into effect this past July 1 and blocks the next change set for January 1, 2025, essentially returning the pay requirements to the 2019 level of $35,568 per year ($684 per week). The decision also invalidates the automatic increases scheduled to take effect in the future.

In striking down the rule, the judge found that the Labor Department’s “2024 Rule plainly exceeds its authority under the [Fair Labor Standards Act].” The judge essentially relied on the same basis as a different Texas federal judge who invalidated the Obama Era overtime rule in 2016. In both cases, the judges found that the high salary level test imposed by the rule effectively rendered moot the job duties tests that are the basis of the overtime exemption for executive, management, and administrative employees.