As mentioned in our previous edition of the Informed Employer, employers continue to face uncertainty with respect to the U.S. Department of Labor’s (DOL) new “white-collar” salary regulations in the face of several pending legal challenges. The Plano Chamber of Commerce and several other business associations filed a lawsuit in a federal court in Texas styled Plano Chamber of Commerce, et al. v. U.S. Dept. of Labor, et al., related to the new salary requirements for “white-collar” employees under the Fair Labor Standards Act (FLSA). As previously discussed, there is also a suit pending in the Fifth Circuit Court of Appeals seeking a ruling that the DOL lacks the authority to order any minimum salary for the white-collar exemptions. And, since our last report, another lawsuit has been filed challenging the DOL’s regulations. The new lawsuit, filed by the Texas Attorney General, is a companion lawsuit in the same court as Plano which also seeks an injunction to prevent the new DOL regulations from going into effect. But will employers know how to proceed by July 1, the first effective date of the salary increases?

As a reminder, these new overtime regulations raise the minimum salary for the executive, administrative, and professional exemptions from $684 per week ($35,568 annually) to $844 per week ($43,888 annually) starting on July 1, 2024, and then again to $1,128 per week ($58,656 annually) starting on January 1, 2025. Also, the salary for “highly compensated employees” will increase to $132,964 per year on July 1, 2024, and then to $151,164 per year on January 1, 2025, respectively. Under these new DOL regulations, the salary minimums will be automatically increased based on changes in average earnings according to statistical data. This escalator will happen every three years starting in 2027. Keep in mind that if the DOL regulations go into effect, employers will either have to increase minimum salaries for their exempt employees or change their FLSA classification to “non-exempt.” The latter means that those employees would have to record their working hours by clocking in and out and further, the employees would be eligible for time-and-a-half overtime for hours worked in excess of forty in a workweek.

The Plano case is assigned to Judge Sean Jordan, who took the bench in 2019 after being appointed by President Trump. It is pending in the same district court that ruled in favor of an injunction in 2016, which was the last time the DOL tried to include an automatic salary increase in their proposed regulations. Many employers remember their sudden change of plans when Judge Amos Mazzant enjoined the 2016 regulations in State of Nevada, et al. v. U.S. Dept. of Labor, et al.

The newly filed lawsuit since our last report, State of Texas v. U.S. Dept. of Labor, et al., was randomly assigned to the above-mentioned Judge Mazzant. However, because the earlier of the two companion lawsuits was assigned to Judge Jordan, Judge Mazzant transferred the Texas case to Judge Jordan’s docket for consolidation.

The lawsuits seek to invalidate the DOL’s regulations, albeit arguing slightly different theories. However, both plaintiffs assert that the DOL has exceeded its statutory authority, similar to what was successfully argued in 2016.

What’s next? Judge Jordan issued a scheduling order on June 7, 2024, stating that briefs in the case must be completed by June 21, and the court will hold a hearing on the Motion for Injunctive Relief on June 24, 2024. That hearing is scheduled just six days before the first salary increase is set to become effective, so it is likely that we will all hear the decision right at the wire.

Ice Miller’s Workplace Solutions attorneys will closely monitor the status of these cases. And, we will provide updates as soon as Judge Jordan issues a ruling to determine the appropriate steps for our clients to take, if any.

If you have questions regarding these cases or what you would need to do in the event the DOL regulations become effective in a few weeks, contact Paul Bittner, Emmanuel Boulukos, Kayla Ernst or any of the members of the Workplace Solutions Practice Group at Ice Miller. And, you can always contact Paul if you want to chat about college football or NHL hockey.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.