Overtime Final Rule enjoined, but only for Texas State employees

Late on Friday, June 28, a federal judge in Texas issued a preliminary injunction halting the U.S. Labor Department’s Overtime Final Rule before it is set to take effect on Monday, July 1. Importantly, the ruling only applies to the State of Texas as an employer, and not to private sector employers, including charitable nonprofits. The judge expressly rejected the option of applying the injunction nationwide. Two other lawsuits from business groups also seek to block the rule; no ruling in those cases has been issued.

The temporary ruling stops the Overtime Final Rule from going into effect while the case is litigated. The judge did, however, give strong signals that he finds the Labor Department’s actions exceed their statutory authority. Briefly, the argument is that the underlying federal Fair Labor Standards Act expressly instructs the Labor Department to develop subjective duties to determine which employees should be exempt from overtime pay based on the job duties they perform – particularly in the areas of executive, administrative, and professional work. That statute does not expressly authorize the Department to utilize an objective salary level test – a minimum pay level below which a person is deemed hourly regardless of job duties. The judge wrote, “Since the ordinary meaning of the [statutory exemption to overtime] focuses solely on duties, any rule implementing the [exemption] – including the 2024 Rule – must likewise center on duties.”


The Overtime Final Rule, released in April and scheduled to start phasing in on July 1, would require employers to pay “white collar” employees salaries of at least $844 per week ($43,888/year) for the employees to remain exempt from receiving pay for overtime they worked at a rate of time and half of their hourly wages. A second, higher salary level threshold is scheduled to take effect on January 1 and hikes to the minimum salary levels would automatically go into effect every three years. Learn more about the rule.