A new level of pay for laid-off white-collar workers is coming, unless… | Constangy, Brooks, Smith & Prophete, LLP

New wage regulations issued by the U.S. Department of Labor will go into effect on July 1. As of that date, the salary threshold exempting white-collar workers from the overtime requirements of the Fair Labor Standards Act will increase to $844 per week, or $43,888 per year. year. Six months later, on January 1, the salary threshold will increase again to $1,128 per week, or $58,656 per year.

Additionally, the annual salary level required to claim the “highly compensated employee” exemption will increase to $132,964 on July 1 and $151,164 on January 1.

However, courts can intervene and stop one or both updates by issuing an injunction. If this happens, the new regulations will suffer the same fate as the regulations issued by the Obama administration in 2016. A federal court in Texas made them permanent just days before they went into effect.

There are three lawsuits pending in Texas challenging the new regulations. The one most likely to see an early ruling is Texas v. U.S. Department of Labor, the complaint was filed June 3 in the U.S. District Court of East Texas. This is the same court that ruled against Obama’s regulations in 2016. The lawsuit alleges that the 2024 regulations create the same problems as the 2016 regulations. That is,

effective July 1, 2024. The Final Rules will classify approximately one million employees “employed in bona fide managerial, administrative, or professional capacities” as non-exempt based on their wages rather than their bona fide job duties…. (A) as of January 1 2025, the Final Rules will classify approximately three million additional workers “employed in bona fide managerial, administrative, or professional capacities” as non-exempt based on their wages rather than work performed in bona fide duties.

Texas asked the court to strike down the minimum wage levels in the 2024 law because, like the levels set in the 2016 law, they “would exclude so many workers who perform exempt duties (that they fail to) further the clear intent of Congress.”

Both parties have filed pleadings, and the hearing is scheduled for Monday, June 24. This gives the court six days to issue an order before it takes effect. We will provide an update once the court issues its ruling.

Two other cases have been filed in Texas challenging the 2024 regulations. W Plano Chamber of Commerce v. U.S. Department of Labor, also filed in the Eastern District of Texas, the plaintiffs argued that because the Eastern District had issued a permanent injunction against the 2016 regulations, it still had jurisdiction to enforce it and should block the 2024 regulations.

The second case, Flint Avenue LLC v. U.S. Department of Labor, was filed in the United States District Court for the Northern District of Texas. This lawsuit alleged that the FLSA does not allow the DOL to consider the salary level test when developing regulations to determine whether an employee is exempt from overtime work. The plaintiff filed a motion for a preliminary injunction on June 12, but no hearing has been scheduled at this time.

In addition to these lawsuits, Congress has passed joint resolutions in both the House and Senate to eliminate the regulations for 2024. The Congressional Review Act allows Congress to eliminate an agency regulation if the resolution receives a majority in each chamber and if the President signs it. However, the Congressional Review Act includes a retrospective provision that states that Congress can eliminate regulations only if they were finalized in the last 60 legislative days of a biennial session. An actual deadline cannot be calculated before the current session adjourns, but experts estimate that any regulations finalized before May 22 will likely be beyond Congress’ reach. Moreover, it is almost certain that President Biden will refuse to sign such a resolution.

Finally, there is a potential indirect threat to the 2024 regulations. In 2019, a lawsuit was filed against regulations issued by the Trump administration that set a required weekly wage of $684 for layoffs of white-collar workers. Mayfield v. United States Department of Labor questioned Trump’s regulations, raising, like the plaintiff in the above-mentioned Flint Alley this case that the DOL does not have the authority to set a salary threshold in its white-collar regulations. The plaintiff lost in district court but appealed to the U.S. Court of Appeals for the Fifth Circuit. The oral hearing is scheduled for August 5. The plaintiff argues that even if a court found that the DOL had the authority to adopt a salary level test, because the FLSA does not clearly define the limits of the DOL’s authority, any regulation containing such a test has “weak legal support.”

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