It’s not often that we have to provide day-to-day updates on the status of the United States Department of Labor rule that raises salary thresholds for overtime exemptions, but here we are.
My colleague, Sarah Westby, posted an update yesterday on a major case from Texas in which the state challenged the rule. Late last Friday, a federal court there issued an injunction preventing the rule from being applied to Texas state workers finding that the rule was likely unlawful. But the court declined to issue a broader injunction, letting the rule take effect July 1, 2024.
You can read more about that decision on our sister blog, Employment Law Letter.
As Sarah noted, another case worth watching was Flint Avenue LLC v. U.S. Department of Labor. Yesterday, we got a decision from a court there that also declined to issue an injuction — meaning that the rule remains in effect.
In that case, the court denied Flint Avenue LLC’s request to block a new U.S. Department of Labor (DOL) rule that raises salary thresholds for overtime exemption. The judge determined that Flint Avenue failed to demonstrate that the new standards would cause irreparable harm, which is necessary to justify an injunction.
Flint Avenue argued that the rule would negatively impact small businesses and necessitate reclassification of a junior employee. However, the company admitted the employee’s salary did not meet the previous exemption threshold, and it attempted to backdate a contract to meet the old requirements.
The DOL contended that Flint Avenue’s claim of irreparable harm was unfounded, because the employee did not qualify for exemption before the new contract.
The court concluded that Flint Avenue’s cost concerns were insufficiently detailed and that their arguments regarding the DOL’s authority would be more appropriately addressed at the summary judgment stage. Consequently, the court did not need to consider the balance of equities or public interest factors, as the required irreparable harm was not proven.
What does this mean for employers? Follow the new rule immediately.
For reference, the increases are as follows:
- Effective July 1, 2024: the salary threshold for employees who meet the executive, administrative, and professional exemptions will increase from the current level of $684 per week ($35,568 annually) to $844 per week ($43,888 annually). In addition, Highly Compensated Employees must be paid at least $2,557/week on a salary basis ($132,964 annually).
- Effective January 1, 2025, the salary threshold for executive, administrative, and professional employees will increase to $1,128 per week ($58,656 annually). Highly Compensated Employees will need to be paid at least $2,907/week on a salary basis ($151,164 annually).
But note: Connecticut does not recognize the highly compensated employee exemption so employers in this state should abide by state law. For more on the subjet, see my prior post here.