The New Jersey Employment Law Firm Blog
Federal and New Jersey employment laws protect many workers’ right to receive overtime pay when working more than forty hours a week. The federal Fair Labor Standards Act (FLSA) provides overtime pay at a time-and-a-half rate. It exempts certain categories of workers, including “executive, administrative, and professional” (EAP) employees. The U.S. Department of Labor (DOL) issued a revised rule earlier this year that modified the criteria for the EAP exemption. The result is that fewer people are exempt from minimum wage and overtime under the FLSA. Lawsuits soon followed. A U.S. district judge recently struck the new overtime rule down. While his initial ruling only applied to the State of Texas as an employer, a subsequent ruling purports to strike the rule down nationwide, including New Jersey.
The FLSA uses broad language in many parts, leaving it to the DOL to work out the details. This includes the precise meanings of “executive, administrative, and professional” jobs. The DOL defines them based on factors like job duties and payment of a salary instead of hourly wages. It sets a threshold salary amount, above which a person falls under the EAP exemption. The new rule increased this threshold amount from $684 to $844 per week, or from $35,568 to $43,888 annually, as of July 1.
The rule sets another increase on January 1, 2025. Beginning on January 1, 2027, the threshold amount increases every three years based on current economic data. Two lawsuits in the Eastern District of Texas followed the publication of the DOL’s rule. Plaintiffs included the State of Texas and various business associations.
The State of Texas sought an injunction preventing the DOL from implementing the new overtime rule. A U.S. district court in Plano, Texas, a suburb of Dallas, issued a preliminary injunction on June 28, 2024. The judge ruled that the rule was “likely unlawful,” finding that the State of Texas had produced sufficient evidence that the DOL exceeded its authority under the FLSA. He held that the “plain meaning” of “executive,” “administrative,” and “professional” indicate that a salary threshold is the wrong metric to use to determine whether someone is subject to the EAP exemption. Instead, “the proper inquiry…must turn on that person’s function and duties.” This injunction only applied to the State of Texas as an employer.
The same judge issued a new order on November 15 that combined the State of Texas’ lawsuit with the business associations’ lawsuit. This order granted summary judgment for the plaintiffs. In effect, it prevents the planned threshold increase from taking effect in 2025. The July 1 increase has already happened, so a significant number of workers in New Jersey and nationwide have already seen their statuses change. How this ruling will affect them remains to be seen.
It seems fair to ask why a ruling from a district judge in suburban Dallas, Texas strikes the new overtime rule down for workers in New Jersey. District court orders with nationwide effect, often known as “nationwide injunctions” or “universal injunctions,” are controversial, but they have become increasingly common. The rationale is often that since the rule applies nationwide, so should the ruling. The U.S. Supreme Court struck down a nationwide injunction in Trump v. Hawaii in 2018 but left the door open for other rulings with nationwide effect.
The experienced employment attorneys at the Resnick Law Group advocate for the rights of New Jersey and New York employees. Please contact us online, at 973-781-1204, or at 646-867-7997 today to schedule a confidential consultation to see how we can help you.