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Last-Minute Order Stops Overtime Rule for Texas State Workers

texas state capitol

Texas will not have to comply with new exempt salary thresholds for white-collar exemptions. However, this ruling is limited. 

The ruling only applies to the State of Texas as an employer; therefore, Texas private employers and other employers across the United States will still have the ruling come into effect.

How Did This Happen?

In Texas v. DOL, Texas focused on how the ruling could affect the state as an employer. While the judge could have issued a nationwide order, it was limited to Texas as an employer because the state was the only party challenging the rule in this particular lawsuit and offered evidence only of its injuries as an employer.

This ruling doesn’t surprise, though, since it mirrors a similar challenge to the Obama administration’s 2016 rule that also tried to increase the salary threshold. The 2016 ruling was also stopped days before effect, and the court also prohibited the DOL from automatically increasing the salary threshold without following requirements under the Administrative Procedure Act.

How Will Employers Other Than the State of Texas be Affected?

Private employers will still have to comply with new salary requirements. 

Under the federal Fair Labor Standards Act (FLSA), employees are usually paid an overtime premium of 1.5 times their regular pay rate for all hours worked beyond 40 in a workweek unless they fall under an exemption. To qualify for the white-collar exemptions—like those in executives, administrative, and professional positions— employees must be paid on a salary basis, get paid at least the designated minimum weekly salary, and perform certain duties.

On July 1, the DOL’s ruling raised the rate to $844 a week ($43,888 annualized), then on January 1, 2025, to $1,128 (or $58,656 a year).

What Needs to be Done Now?

Although the ruling was stopped for the State of Texas, it doesn’t mean things are over. We expect more challenges to the ruling to occur throughout the rest of summer. Thus, it’ll be important to track all legal developments that occur.

Furthermore, it’s also a good time to review your company practices. For example, evaluate options, costs, and budgets. Also, review your HRIS, payroll, and timekeeping systems to ensure you can capture all time worked and properly calculate overtime. As this is being done, it’s important to gather communications for employees and their supervisors, clearly explaining any changes and providing written notice if state law requires. 

Preparation is the best you can do during this time.