On Friday, June 24, 2024, the business day before the Biden Department of Labor’s new overtime rule was scheduled to take effect, a federal district judge granted the State of Texas’s motion for a preliminary injunction to postpone the effective date of the rule, concluding the rule “is likely unlawful.”  Notably, the decision—in State of Texas v. U.S. Dep’t of Labor, No. 4:24-CV-499-SDJ (E.D. Tex.)—arises from the same division of the same federal district court that invalidated the Obama administration’s new overtime rule in 2016.  Unlike that 2016 decision, however, Friday’s injunction is not national in scope—it is limited to the State of Texas as employer.

In reviewing the State’s likelihood of success in challenging the rule, the court cited to the Supreme Court’s decision in Loper Bright Enters. v. Raimondo, decided earlier that day, which overruled Chevron USA Inc. v. Natural Resources Defense Council, Inc. and held that “[c]ourts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority.”

The 2024 overtime rule (the “2024 Rule”) would have, among other things, increased the minimum salary for exemption as executive, administrative, or professional (“EAP”) employee from $684 per week ($35,568 annualized) to $844 per week ($43,888 annualized) effective July 1, 2024 and to $1,128 per week ($58,656 annualized) effective January 1, 2025.  The question for the court was whether the text of the EAP exemptions—codified in the FLSA regulations at 29 C.F.R. Part 541 and which permits the Secretary of Labor to “define” and “delimit” the terms “executive,” “administrative,” and “professional”—authorizes the Secretary to increase the minimum salary level to that degree.  The court noted that “[t]he plain meaning of these terms makes clear that the proper inquiry into whether someone works in an executive, administrative, or professional capacity must turn on that person’s function and duties”—and not their compensation.  As such, “any rule implementing the EAP Exemption—including the 2024 Rule—must likewise center on duties.” 

The court concluded that “Texas is likely to succeed on its claim that the 2024 Rule’s changes to the minimum salary level contravene the plain text of the EAP Exemption and that the 2024 Rule therefore impermissibly exceeds the Department’s authority to define and delimit the EAP Exemption.”  Hearkening back to its decision to invalidate the 2016 overtime rule—and including a welcome reference to Yogi Berra—the court noted that the degree of the increases in minimum salary for exemption effectively strip the duties test of meaning:

As the New York Yankees’ (inarguably) best catcher is reported to have said, this is “déjà vu all over again.” …  In its 2024 Rule, the Department once again seeks to implement sweeping changes to the EAP Exemption’s regulatory framework, designed on their face to effectively displace the FLSA’s duties test with a predominant, if not exclusive, salary-level test….   Thus, when the 2024 Rule goes into effect, the Department [of Labor] calculates that one million exempt employees will wake up on July 1 non-exempt—i.e., entitled to overtime pay….  On January 1, the same thing will happen to another three million employees….  Then, on July 1, 2027, and every three years thereafter, millions more employees will have their statuses changed.  Nothing about these employees’ jobs will have changed….  Rather, the only changes determining their statuses and making them non-exempt will be increases to the minimum salary level in the Acting Secretary’s definition and delimitation of the EAP Exemption.

As to the geographic limits of the injunction, the court acknowledged that the law neither requires nor prohibits relief that is nationwide in scope; that the only party seeking relief here is the State of Texas; that Texas has introduced evidence of its own injuries as an employer but has not otherwise offered any evidence of injuries to other entities or individuals; and therefore that under the circumstances, a preliminary injunction focused on Texas comports with the procedural posture of the case and the record before the court.  As such, if a nationwide injunction of the 2024 Rule is to issue, it will be in another lawsuit on another day–perhaps before the next round of increases in January 2025. 

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Photo of Allan Bloom Allan Bloom

Allan Bloom is the co-chair of Proskauer’s Labor & Employment Law Department and a nationally recognized litigator and advisor who represents employers, business owners, and management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended…

Allan Bloom is the co-chair of Proskauer’s Labor & Employment Law Department and a nationally recognized litigator and advisor who represents employers, business owners, and management in a broad range of employment and labor law matters. As a litigator, Allan has successfully defended many of the world’s leading companies against claims for unpaid wages, employment discrimination, breach of contract and wrongful discharge, both at the trial and appellate court levels as well as in arbitration, before government agencies, and in private negotiations. He has secured complete defense verdicts for clients in front of juries, as well as injunctions to protect clients’ confidential information and assets.

As the leader of Proskauer’s Wage and Hour Practice Group, Allan has been a strategic partner to a number of Fortune 500 companies to help them avoid, minimize and manage exposure to wage and hour-related risk. Allan’s views on wage and hour issues have been featured in The New York Times, Reuters, Bloomberg and Fortune, among other leading publications. His class-action defense work for clients has saved billions of dollars in potential damages.

Allan is regularly called on to advise operating companies, management companies, fund sponsors, boards of directors and senior leadership on highly sensitive matters including executive and key person transitions, internal investigations and strategic workforce planning. He has particular expertise in the financial services industry, where he has litigated, arbitrated, and mediated disputes for more than 20 years.

A prolific author and speaker, Allan was the Editor of the New York State Bar Association’s Labor and Employment Law Journal from 2012 to 2017. He has served as an author, editor and contributor to a number of leading treatises in the field of employment law, including ADR in Employment Law (ABA/Bloomberg BNA), Employment Discrimination Law (ABA/Bloomberg BNA), Cutting Edge Advances in Resolving Workplace Disputes (Cornell University/CPR), The Employment Law Review (Law Business Research, U.S. Chapter Author), and The Complete Compliance and Ethics Manual (SCCE).

Allan has served as longtime pro bono counsel to Lincoln Center for the Performing Arts and The Public Theater, among other nonprofit organizations.  He is a past Vice Chair of Repair the World, a nonprofit organization that mobilizes volunteers and their communities to take action to pursue a just world, and a past recipient of the Lawyers Alliance Cornerstone Award for extraordinary contributions through pro bono legal services.

Allan is a Fellow of the College of Labor and Employment Lawyers and has been recognized as a leading practitioner by Chambers since 2011.