Fourth of July Fireworks Courtesy of the State of Texas and the Supreme Court

While there may be no crying in baseball, there was crying at the Department of Labor (DOL) last week on Independence Day. A Federal Judge in Sherman, Texas has ruled that the DOL Final Rule raising the minimum salaries for exempt Texas state employees should be frozen. Add to this the U.S. Supreme Court’s ruling in Loper last week, and there’s going to be a wet blanket on the DOL’s Fourth of July cook-out. If you feel like we’ve been here before, you are right.

What happened?

In Texas v. U.S. Department of Labor, et al., Judge Sean Jordan temporarily barred the DOL from applying the minimum salary rule to Texas state workers. As a reminder, the new exempt employee salary rules require a minimum salary of $844 per week ($43,888/year) and then, on January 1, 2025, it goes up to $1,128 per week ($58,656/year). Judge Jordan in citing to his own court’s 2017 decision in Nevada v. U.S. Department of Labor, pointed out that the DOL was a repeat offender. Just as the DOL attempted back in 2017, the DOL “essentially ma[de] an employee’s duties, functions, or tasks irrelevant if the employee’s salary fell below the new minimum salary level,” and unlawfully “made salary rather than an employee’s duties” the determinative factor. The FLSA exempts from overtime requirements “any employee employed in a bona fide executive, administrative, or professional capacity,” not salary levels. Because the DOL attempted to impose a similar salary level test that failed in 2017, it exceeded its statutory authority under the FLSA.

What does Loper have to do with all this?

Just two weeks ago, in the landmark case of Loper Bright Enterprises v. Raimondo, the United States Supreme Court found that administrative agency rules no longer have to be given judicial deference (the Chevron doctrine). Translated into English this means that just because a governmental agency interprets its own rule, it doesn’t mean the courts have to accept it as law.  Without doubt, the Loper decision will significantly cut into the powers of agencies like the DOL.

For the past 40 years, based on the Chevron doctrine, “courts have sometimes been required ‘to defer to “permissible” agency interpretations of the statutes those agencies administer—even when a reviewing court reads the statute differently.’” This means that regardless of congressional fiat, it was allowable for the DOL and other agencies to interpret their own rules. In effect, it was permissible for the fox to guard the hen house.

As the Loper Court found, the Chevron doctrine:

“is misguided because agencies [like the DOL] have no special competence in resolving statutory ambiguities. Courts do.


That is no less true when the ambiguity is about the scope of an agency’s own power—perhaps the occasion on which abdication in favor of the agency is least appropriate.”

In the FLSA context, 29 U.S.C. § 213(a)(1) says the determination of an exempt status is based on an employee’s duties; the word “salary” is glaringly absent. Therefore, as the 2017 Nevada case explained, the DOL Rule setting a salary floor is wrong. Applying Loper, the DOL can be said to have abused its administrative powers with the salary minimums.

So what do employers do now?

Technically, the Texas court ruling has no impact on any employer other than the State of Texas. This and other similar cases may signal a freeze on these increases of new proposed salaries.

With that said, employers are well advised to review their salaried employees and be sure their salaries are commensurate with their duties and responsibilities. Budgeting for 2025 should have this new rate factored in. Employers should consider whether employees under the $844/week floor should take the elevator up to a higher rate. If the higher salary goes into effect, an employer will be ready. If it doesn’t, while you can prospectively cut salaries, it doesn’t do much for employee morale. To paraphrase a popular World War I song, “How Ya Gonna Keep ’em Down on the Farm after they’ve seen $844?”

Keep your radar on for any nationwide bans or other precedential decisions. We don’t know what the future will hold, but it’s quite foreseeable the salary rules will change again. And in the words of Yogi Berra, watch out for “déjà vu all over again.”

If you would like additional information or guidance regarding the minimum salary rule for exempt Texas state employees, the Loper decision, or any other topic, do not hesitate to contact Madalene A.B. WitterholtJohn H. Yoon, or another member of the firm’s Labor & Employment Practice Group.