It took a few months, but in a ruling that should surprise no one, a federal judge in Texas has blocked the U.S. Department of Labor’s new overtime exemption rule that increased the minimum salaries for workers to be considered exempt from overtime pay under the executive, administrative, and professional exemptions. The ruling by Judge Sean D. Jordan of the U.S. District Court for the Eastern District of Texas applies nationwide. Judge Jordan issued a similar ruling in June, blocking the rule from taking effect for employees of the State of Texas. While the Department of Labor can appeal…
Continue Reading Federal Court Blocks New Overtime Rule

On August 23, 2024, the Fifth Circuit Court of Appeals struck down a 2021 regulation by the U.S. Department of Labor restricting employers’ use of the tip credit for tipped employees under the Fair Labor Standards Act. The ruling effectively does away with the DOL’s longstanding “80-20” rule.

The case is Restaurant Law Center, v. U.S. Dept. of Labor, 5th Cir., No. 23-50562, August 23, 2024.

Background

The Fair Labor Standards Act requires employers to pay employees a specified minimum wage, currently $7.25 per hour for most employees. However, under FLSA Section 3(m), employers are allowed to count up…
Continue Reading 5th Circuit Strikes Down 2021 Tip Rule

Many employers make the mistake of assuming that employees can be treated as exempt so long as they have certain job titles or are paid a salary rather than an hourly wage. That error is especially common in small businesses like restaurants. It can be an expensive mistake, as one D.C. restaurant recently learned after a federal court ruled that its former chef was entitled to approximately $450,000 in unpaid overtime wages and liquidated damages, plus attorneys’ fees.

Adan Sanchez Sanchez was employed at Malbec restaurant, an Argentinian steakhouse located in Washington, D.C., from December 2015 to August 2019. Throughout…
Continue Reading Another Cook in the Kitchen: Court Finds Chef Is Entitled to Overtime

After a federal judge in the Eastern District of Texas blocked the DOL’s new overtime exemption rule as it pertains to Texas state employees, another judge in the Northern District of Texas declined to issue a similar injunction in a challenge brought by tech company Flint Avenue, LLC. Without addressing the merits of the company’s challenge to the new rule, the court found that a preliminary inunction was not needed because the company did not have any exempt employees who would immediately be rendered nonexempt under the new rule on July 1, 2024. The company conceded that the one…
Continue Reading Tech Firm’s Attempt to Block Overtime Rule Falls Short

On Friday, a federal district court granted a preliminary injunction sought by the State of Texas to block implementation of the U.S. Department of Labor’s new rule increasing minimum salaries for overtime exempt employee. However, the court limited the effect of its injunction to the State of Texas as an employer.

The court concluded that the DOL exceeded its authority by making salary level, rather than job duties, the deciding factor in determining whether many employees fall within the executive, administrative, and professional exemptions under the Fair Labor Standards Act. Although Texas asked for a nationwide injunction, the court declined…
Continue Reading Court Blocks New DOL Rule – But Only for Texas

With the DOL’s new overtime exemption rule set to go into effect on July 1 and no ruling yet on the state of Texas’s motion to put the rule on hold, employers will need to decide what to do with exempt employees whose minimum salary falls below the new threshold.

For some employees, the best path may be to convert an exempt employee’s salary to an hourly rate so that employees’ take home pay remains steady once overtime is factored in. In principle, this is relatively simple: just calculate how many hours the employee is expected to work, then do…
Continue Reading Converting Exempt Employees to Non-Exempt

The clock is quickly ticking down to July 1, when the U.S. Department of Labor’s new rule increasing the minimum salary for many employees to be considered exempt from overtime under the Fair Labor Standards Act is supposed to take effect. When a similar rule was supposed to take effect back in 2016, the clock was paused at the last moment by a federal judge in Texas, who found that the DOL exceeded its authority under the FLSA by making salary rather than job duties the controlling factor for whether an employee is an exempt executive, administrative, or professional employee.
Continue Reading Will The New Overtime Rule Take Effect July 1?

A common question for schools assessing how to comply with the new overtime exemption rule published by the U.S. DOL is what to do about coaches and athletic trainers in light of the new minimum salary requirement for the executive, administrative and professional exemptions.

For coaches, two exemptions may still apply even if the coach’s salary falls below the new thresholds of $884 per week (starting July 1, 2024) or $1,128 per week (starting January 1, 2025). A coach whose primary job duties are instructing student athletes on topics such as athletic performance, physical health, team concepts, and safety, or…
Continue Reading Coaches and Athletic Trainers Under the New FLSA Exemption Rules

The U.S. Department of Labor recently published new final regulations that increase the minimum salary level for most employees to be considered exempt under the executive, administrative, and professional exemptions to the Fair Labor Standards Act. While these new rules could affect some 4 million workers, not all exempt employees are subject to the minimum salary requirement.

Most significantly, the professional exemption for teachers does not have any salary basis or salary level requirement. A teacher, for purposes of the FLSA, is an employee whose primary duty is teaching, tutoring, instructing, or lecturing to impart knowledge, performed as an employee…
Continue Reading Not All Exempt Employees Are Affected by the New Minimum Salary Rule