Texas Court Blocks DOL Minimum Salary Rule on a Nationwide Basis

Today, a federal judge in Texas blocked the U.S. Department of Labor (“DOL”) from enforcing a rule that would have expanded overtime eligibility for millions of workers by raising the salary minimum to $58,656 effective January 1, 2025.

What Does This Ruling Mean?

Employers are no longer required to increase the salary threshold to $58,656 in order to classify employees as exempt from overtime. Notably, this includes the increase to $43,888 that took effect on July 1, 2024. According to the court’s decision, both increases were unlawful. Thus, the annual salary threshold reverts back to $35,568.

Texas Challenge to DOL’s Minimum Salary Rule

The DOL rule was challenged by a coalition of business groups in Texas who argued that the rule exceeded the “statutory jurisdiction, authority, or limitations” of the DOL and was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.”

The U.S. District Court for the Eastern District of Texas agreed and found the increases created a “salary only” test instead of a combined test that looks at compensation and the duties performed by employees who are classified as executive, administrative or professional employees. The court also found that any increase in the salary threshold should be made through proper procedures which would require that regulations be adopted in accordance with the Administrative Procedure Act. Because this procedure was not followed, the DOL exceeded its authority.

The court’s decision effectively blocks the rule from taking effect across the United States.

What To Expect Next?

The DOL may appeal the decision to the Fifth Circuit Court of Appeals. With a new administration coming in January, it is unlikely that future attempts to increase the salary threshold will occur any time soon. It is also unclear whether the litigation will continue through the appellate process under the Trump administration.

If you have any questions on how this opinion affects you, do not hesitate to reach out to the McGrath North Labor and Employment team!