Blog & Legal Updates

Federal Overtime Rule Changes: What Texas & New Mexico Businesses Need to Know

By: Rosemary M. Marin – Attorney, ScottHulse PC

The U.S. Department of Labor (DOL) recently announced substantial changes to federal overtime regulations, set to take effect in two phases starting July 1, 2024, unless court challenge(s) to the Final Rule are upheld. These changes could significantly raise the salary threshold for employees to be exempt from overtime pay, potentially impacting millions of workers across the U.S.

Key Changes:

  • Increases the minimum salary threshold level for the three major categories of exempt employees. The final rule increases the salary threshold required to exempt a bona fide executive, administrative, or professional employee from federal overtime requirements. The new salary threshold will occur in two phases.
    • Effective July 1, 2024, the threshold will increase to $844 per week, which is the equivalent of an annual salary of $43,888.
    • Effective January 1, 2025, the threshold will then increase to $1,128 per week, which is the equivalent of an annual salary of $58,656.
  • Increases the highly compensated employee total annual compensation threshold. The final rule also increases the earnings threshold for the highly compensated employee (C-Suite) exemption, also in two phases.
    • Effective July 1, 2024, the total annual compensation requirement for highly compensated employees will be $132,964.
    • Effective January 1, 2025, the annual compensation requirement will increase to $151,164.
  • Provides for the automatic updating of these thresholds every three years. The final rule implements a mechanism that provides for automatic updates to the thresholds listed above based on wage data at the time of the update.  So, if these remain in place, employers will need to be diligent in keeping up to date as the threshold increases over time.

Legal Challenge:

A coalition of business groups has filed a lawsuit seeking to block the new rule, arguing the DOL exceeded its authority. In the case of Plano Chamber of Commerce v. U.S. Department of Labor, filed in the U.S. District Court for the Eastern District of Texas on May 22, 2024, the plaintiffs claim that the DOL “acted arbitrarily, capriciously, and otherwise not in accordance with the law” in issuing the Final Rule and requests that the DOL be enjoined from enforcing it.  The outcome of this lawsuit remains uncertain and could delay or modify the implementation of the new overtime rules.

How We Can Help:

At ScottHulse PC, our experienced Labor and Employment team is closely monitoring these developments and is ready to help you navigate the complexities of the new overtime regulations. Whether you need assistance updating your policies, reclassifying employees, or understanding the legal implications of the lawsuit, we offer comprehensive guidance tailored to your business needs.

Don’t wait until it’s too late. Contact us today to ensure your business is prepared for the potential impact of these significant changes.

Disclaimer: This information is provided for general informational purposes only and should not be construed as legal advice. Consult with an attorney for specific guidance on how the new overtime rules may affect your business.

©ScottHulse, P.C. This material is provided for informational purposes only. It is not intended to constitute legal advice nor does it create a client-lawyer relationship between ScottHulse and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material.

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