A federal court in the Eastern District of Texas has struck down a recent Department of Labor (DOL) rule change that would have increased the income limit of people eligible for overtime under the Fair Labor Standards Act (FLSA). Under the court’s ruling, the overtime rule itself is unconstitutional, not only invalidating this rule change, but also a previous income increase. The net result is that fewer people will now be eligible for overtime pay in their current positions.
What Was This Rule?
The new rule change was originally issued by the Department of Labor in April 2024, which raised the income level at which people are eligible for overtime pay under the FLSA to $844 per week ($43,888 annually) effective July 1. An additional increase in the overtime threshold was set to take effect on January 1, increasing it to $1,128 per week ($58,656 annually). The rule was also set to increase the overtime limit every three years to keep up with inflation.
What Was the Lawsuit About?
The State of Texas, along with a number of other plaintiffs, sued to halt the implementation of this new rule. They filed a motion of summary judgment seeking to have the rule change declared illegal, claiming the DOL had exceeded their statutory authority under the FLSA. By trying to implement this rule, they claimed the DOL had gone against the language of the text, substituting their judgment for the plain language of the law.
What Did the Court Rule?
In its ruling, the court granted the motion for summary judgment against the DOL, invalidating the rule and declaring it unconstitutional. This means that not only are the future increases in overtime pay now gone, the increase that was implemented back in July is also retroactively invalidated. This means that significantly fewer people will now be eligible for overtime under the FLSA.
What is the Impact of the Ruling?
In the immediate sense, this ruling will cost many people overtime pay that they might have otherwise been eligible for. The ruling also undermines the authority of the DOL to make similar rules in the future. It may also cause problems for employers who already had made plans to change employee compensation in anticipation of these rules being implemented.
Steven Mitchell Sack, the Employee’s Lawyer, is a New York employment lawyer with more than 44 years’ experience handling the many aspects of employment law. His new book, “Fired!: Protect Your Rights & FIGHT BACK If You’re Terminated, Laid Off, Downsized, Restructured, Forced to Resign or Quit,” is available in hardback, and contains valuable advice on dealing with employment and labor law issues. To purchase the book, feel free to contact Steven Sack at 917-371-8000 or visit the website at legalstratpub.com. To inquire about a legal matter, please feel free to contact attorney Steven Sack at 917-371-8000 or stevensackatty@hotmail.com.
