Case 4:24-cv-00468-SDJ Document 1 Filed 05/22/24 Page 1 of 25 PageID #: 1
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`Civil Action No. 4:24-cv-468
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`PLANO CHAMBER OF COMMERCE;
`AMERICAN HOTEL AND LODGING
`ASSOCIATION; ASSOCIATED
`BUILDERS AND CONTRACTORS;
`INTERNATIONAL FRANCHISE
`ASSOCIATION; NATIONAL
`ASSOCIATION OF CONVENIENCE
`STORES; NATIONAL ASSOCIATION
`OF HOME BUILDERS; NATIONAL
`ASSOCIATION OF WHOLESALER-
`DISTRIBUTORS; NATIONAL
`FEDERATION OF INDEPENDENT
`BUSINESS, INC.; NATIONAL RETAIL
`FEDERATION; RESTAURANT LAW
`CENTER; TEXAS RESTAURANT
`ASSOCIATION; COOPER GENERAL
`CONTRACTORS; DASE BLINDS,
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`Plaintiffs,
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`vs.
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`SHERMAN DIVISION
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`JULIE SU, ACTING SECRETARY,
`UNITED STATES DEPARTMENT OF
`LABOR, in her official capacity; JESSICA
`LOOMAN, ADMINISTRATOR, WAGE
`AND HOUR DIVISION, U.S.
`DEPARTMENT OF LABOR, in her
`official capacity; and UNITED STATES
`DEPARTMENT OF LABOR,
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`Defendants.
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`COMPLAINT
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`On behalf of themselves and the millions of businesses and employers they represent in
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`Texas and throughout the United States, Plaintiffs allege as follows:
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`4881-5730-5010.5 / 122343-1002
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`PRELIMINARY STATEMENT
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`1.
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`In 2017, this Court permanently enjoined a Department of Labor (“Department” or
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`“DOL”) regulation (the “2016 Rule”) which attempted to dramatically raise the minimum salary
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`required for executive, administrative, or professional (“EAP”) employees to be classified as
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`exempt from overtime pay under the Fair Labor Standards Act (“FLSA”). The Court also declared
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`unlawful the Department’s attempt to automatically increase the salary threshold on a triennial
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`basis thereafter. See State of Nevada et al. v. U.S. Dep’t of Labor, 218 F. Supp. 3d 520 (E.D. Tex.
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`2016) (preliminarily enjoining 2016 Rule) (Nevada I); 275 F. Supp. 3d 795 (E.D. Tex. 2017)
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`(permanently invalidating 2016 Rule) (Nevada II). Among other things, this Court found that “the
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`Department’s authority is limited by the plain meaning of the words in the [FLSA] and Congress’s
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`intent.” Id. at 805. Accordingly, this Court prohibited the Department from increasing the
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`minimum salary for exemption to a level that “essentially make[s] an employee’s duties, functions,
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`or tasks irrelevant if the employee’s salary falls below the new minimum salary level.” Id. at 806.
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`The Court further held unlawful the Department’s attempt to “make salary rather than an
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`employee’s duties determinative of whether a ‘bona fide executive, administrative, or professional
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`capacity employee’ should be exempt from overtime pay.” Id. at 807. Finally, the Court struck
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`down the Department’s indexing automatic increases in the salary threshold without notice or
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`comment as required by law.1
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`2.
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`Plaintiffs are back before this Court because the Department has done it again. In
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`direct defiance of this Court’s previous order, the Department has issued yet another rule raising
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`1 Pursuant to Local Rule CV-42, Plaintiffs hereby notify the Court that this action involves subject
`matter that comprises all or a material part of the subject matter and operative facts of the above
`described action previously decided by this Court, in which many of the same plaintiffs and the
`defendant Department of Labor participated.
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`2
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`the minimum salary for the EAP exemption far beyond a level which DOL is permitted to adopt,
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`and again included an unlawful triennial “escalator” provision. See “Defining and Delimiting the
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`Exemptions for Executive, Administrative, Professional, Outside Sales and Computer
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`Employees,” 89 Fed. Reg. 32842 (April 26, 2024) (the “2024 Overtime Rule” or “2024 Rule”).
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`Like its unlawful predecessor, the 2024 Rule will impermissibly deprive millions of employees—
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`including countless workers employed by Plaintiffs and their members in Texas and across the
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`country—of their exempt status. The Department’s 2024 Rule again will “essentially make an
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`employee’s duties, functions, or tasks irrelevant if the employee’s salary falls below the new
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`minimum salary level,” and will unlawfully “make salary rather than an employee’s duties
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`determinative of whether a ‘bona fide executive, administrative, or professional capacity
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`employee’ should be exempt from overtime pay.” Nevada II, 275 F. Supp. 3d at 806-07.
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`3.
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`The Department’s 2024 Overtime Rule largely repeats the errors of the 2016 Rule
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`and fails to address the flaws previously identified by this Court. The Department’s new EAP
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`salary thresholds far exceed the limits of the statutory authority recognized by this Court; indeed,
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`as further discussed below, the Fifth Circuit is presently considering whether the FLSA authorizes
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`any minimum salary thresholds at all. See Mayfield v. U.S. Dept. of Labor, No. 23-50724 (5th Cir.)
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`(appeal pending, briefing completed).2 Moreover, the Department has failed to adequately justify
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`the dramatic change in policy embodied in the Rule, failed to take into account the strong reliance
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`2 See also Helix Energy Solutions Group, Inc. v. Hewitt, 598 U.S. 39, 67 (Kavanaugh, J. dissenting)
`(“The [FLSA] focuses on whether the employee performs executive duties, not how much an
`employee is paid or how an employee is paid. So it is questionable whether the Department's
`regulations—which look not only at an employee's duties but also at how much an employee is
`paid and how an employee is paid—will survive if and when the regulations are challenged as
`inconsistent with the Act.”).
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`3
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`interests of the regulated community, and failed to meaningfully consider reasonable alternatives,
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`all in violation of the Administrative Procedure Act (“APA”), 5 U.S.C. § 500 et seq.
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`4.
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`The first phase of the 2024 Rule is scheduled to go into effect on July 1, 2024,
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`followed by a second, even more substantial increase in the minimum salary for exemption on
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`January 1, 2025. When fully effective as of January 1, 2025, the new Overtime Rule will increase
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`the minimum annual EAP salary threshold from the current $35,568 to $58,656,3 an increase of
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`65%. See 89 Fed. Reg. 32971 (29 C.F.R. § 541.600). It likewise will increase the minimum salary
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`for exempting “highly compensated employees” (“HCEs”) from $107,432 to $151,164 as of
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`January 1, 2025 (a 41% increase over the current HCE threshold). Id.at 32972 (29 C.F.R. §
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`541.601).4 Finally, like the unlawful 2016 Rule, the 2024 Rule includes an unlawful automatic
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`indexing provision that will further increase the EAP minimum salary threshold without the notice-
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`and-comment rulemaking required by the APA, see id. at 32973 (29 C.F.R. § 541.607). Contra,
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`Nevada II, 275 F. Supp. 3d at 808.
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`5.
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`Countless employer members of the Plaintiff associations - across many industries,
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`job categories, and geographic areas - will suffer irreparable harm from the loss of their employees’
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`previously exempt status under the 2024 Rule. The costs of compliance will force many smaller
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`employers and non-profits operating on fixed budgets to cut critical programming, staffing, and
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`services to the public. Many employers will lose the ability to effectively and flexibly manage their
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`workforces upon losing the exemption for frontline executives, administrators, and professionals.
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`3 The new Rule first increases the EAP threshold from the current $35,568 annually to $43,888
`effective July 1, 2024, with the full 65% increase to $58,656 becoming effective on January 1,
`2025. 89 Fed. Reg. 32971, 29 CFR 541.600. The threshold will then increase automatically as of
`July 1, 2027, and every three years thereafter. See 29 C.F.R. 541.607.
`4 Again, the 2024 Rule first raises the HCE threshold from $107,432 to $132,964 effective July 1,
`2024, with the full 41% increase to $151,164 becoming effective January 1, 2025, and indexed
`every three years thereafter.
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`4
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`Millions of employees across the country will have to be reclassified from salaried to hourly
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`workers, resulting in restricted work hours that will deny them opportunities for advancement and
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`hinder their job performance—to the detriment of their employers, their customers, and their own
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`careers. Finally, the inclusion of the unlawful escalator provision will exacerbate the harmful
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`impact on businesses, both large and small, and will add to the rampant inflation that is already
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`harming the economy as a whole.
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`6.
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`Because the first phase of the increased salary threshold is scheduled to take effect
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`on July 1, 2024, and the full impact will be felt a mere six months later on January 1, 2025,
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`expedited consideration of this Complaint is requested in order to avoid irreparable harm to both
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`employers and employees who will be subject to new overtime requirements of the Department’s
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`unlawful Rule.
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`PARTIES
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`7.
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`Plaintiff Plano Chamber of Commerce (“Plano Chamber”) is committed to
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`maximizing business development and economic growth of the Plano, Texas community through
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`advocacy, education, innovation, and collaboration. The Plano Chamber was the lead business plaintiff
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`on the Nevada II case and again joins with other business associations bringing this action on behalf
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`of its members who will be harmed by the 2024 Overtime Exemption Rule. These members employ
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`executive, administrative, and/or professional (“EAP”) employees whose job duties make them
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`lawfully exempt from overtime under the current minimum salary requirements. But some of these
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`employees are threatened with losing their exempt status under the new Rule because their salaries are
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`below the dramatically increased minimum salaries about to be imposed. As a result, the Plano
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`Chamber’s members will face increased labor costs and harm to their employee relations if the new
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`Rule is allowed to take effect.
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`5
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`8.
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`Plaintiff American Hotel and Lodging Association (“AHLA”) is the leading voice
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`representing every segment of the hotel industry including major chains, independent hotels,
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`management companies, REITs, bed and breakfasts, industry partners, and more. AHLA
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`represents the interests of its members in regulatory matters relating to employment. In addition,
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`AHLA itself is harmed by the new Overtime Rule, as it is also subject to the minimum wage,
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`overtime, and recordkeeping requirements imposed by the FLSA for non-exempt employees.
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`9.
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`Plaintiff Associated Builders and Contractors (“ABC”) is a national construction
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`industry trade association representing more than 23,000 chapter members. The vast majority of
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`ABC members are small businesses, and they employ many workers who are currently exempt
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`under the established salary threshold, whose exempt status will be jeopardized under the
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`Department’s 2024 Rule, as is also true of ABC itself. ABC is bringing this action on its own
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`behalf as well as on behalf of its member companies in the construction industry, including plaintiff
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`CGC (referenced below).
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`10.
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`Plaintiff International Franchise Association (“IFA”) is a membership organization
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`of franchisors, franchisees, and suppliers. The IFA’s membership includes more than 1,350
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`franchisor companies and more than 12,000 franchisees nationwide, including in Texas. IFA
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`brings this action on behalf of itself and its members who employ EAP workers whose exempt
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`status is jeopardized by the 2024 Rule.
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`11.
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`Plaintiff National Association of Convenience Stores (“NACS”) advances the role
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`of convenience stores as positive economic, social, and philanthropic contributors to the
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`communities they serve. The U.S. convenience store industry, with 148,000 stores selling fuel,
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`food and merchandise, serves 160 million customers daily. NACS serves the convenience and fuel
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`retailing industry by, among other things, working to protect the best interests of the convenience
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`6
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`and fuel retailing industry before Congress and federal agencies NACS is bringing this action on
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`its own behalf and on behalf of its members whose employees’ exempt status is jeopardized by the
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`challenged Rule.
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`12.
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`Plaintiff National Association of Home Builders (“NAHB”) is a national trade
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`association whose chief mission is that all Americans have access to safe, decent, and affordable
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`housing. NAHB is a federation of more than 700 state and local associations, representing over
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`140,000 individual members in Texas and across the country, who are home builders, remodelers,
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`and others in housing-related industries, such as housing finance, manufacturing, and building
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`supplies. NAHB is bringing this action on behalf of its members and local associations whose
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`exempt employees are at risk of losing their exempt status because of the 2024 Rule.
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`13.
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`Plaintiff National Association of Wholesaler-Distributors (“NAW”) is an employer
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`and a non-profit, non-stock, incorporated trade association that represents the wholesale
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`distribution industry—the essential link in the supply chain between manufacturers and retailers
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`as well as commercial, institutional, and governmental end users. NAW is made up of direct
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`member companies and a federation of 59 national, regional, and state associations across 19
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`commodity lines of trade which together include approximately 35,000 companies operating
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`nearly 150,000 locations throughout the nation. The overwhelming majority of wholesaler-
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`distributors are small-to-medium-size, closely held businesses. As an industry, wholesale
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`distribution generates more than $8 trillion in annual sales volume providing stable and well-
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`paying jobs to more than 6 million workers. NAW is bringing this action on its own behalf as well
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`as on behalf of its members’ companies who employ exempt employees whose status is placed at
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`risk by the 2024 Rule.
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`7
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`14.
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`Plaintiff the National Federation of Independent Business (“NFIB”) is the nation’s
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`leading small business advocacy association, representing members in all 50 states and
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`Washington, D.C. NFIB represents about 325,000 independent business owners who are adversely
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`impacted by the 2024 Rule, as is NFIB itself. NFIB brings this action on behalf of itself and its
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`members.
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`15.
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`Plaintiff National Retail Federation (“NRF”) is the world’s largest retail trade
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`association, representing retailers of all types and sizes across the United States. NRF brings this
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`action on behalf of itself and its members, whose exempt employees’ status is placed at risk by the
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`2024 Rule.
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`16.
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`Plaintiff Restaurant Law Center (“RLC”) is the only independent public policy
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`organization created specifically to represent the interests of the food service industry in the courts.
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`This labor-intensive industry is comprised of over one million restaurants and other foodservice
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`outlets employing nearly 16 million people—approximately 10 percent of the U.S. workforce,
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`including many exempt employees throughout the country. As is currently the case, the RLC
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`participates in litigation to provide courts with the industry’s perspective on legal issues that have
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`the potential to significantly impact its members and its industry at large. The RLC is bringing this
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`action on behalf of itself and its members, who will be adversely impacted by the 2024 Rule when
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`attempting to properly classify exempt employees.
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`17.
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`Plaintiff Texas Restaurant Association (“TRA”) is a non-profit organization with
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`thousands of members throughout Texas, including many members in this district who will be
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`injured by the 2024 Rule. The TRA is the leading business association for Texas’ $106 billion
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`foodservice industry, which spans upwards of 56,000 locations throughout the state, employing a
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`workforce of 1.4 million – 11% of the state’s employment – many of whose exempt status is
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`8
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`jeopardized by the Rule. The TRA is bringing this action on behalf of itself and its members whose
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`employees’ exempt status is placed at risk by the 2024 Rule.
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`18.
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`Plaintiff Cooper General Contractors (“CGC”) is a minority-owned, family-
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`oriented commercial construction contractor based in Plano, Texas. CGC is a member of plaintiff
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`ABC. CGC employs a number of executive, administrative, and/or professional employees who
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`are lawfully exempt from overtime under the Fair Labor Standards Act as it is currently enforced
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`by the U.S. Department of Labor. Under the Department’s new Rule, CGC will face increased
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`labor costs and harm to its employee relations unless the company dramatically increases its
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`exempt salary structure to the levels mandated by the new Rule.
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`19.
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`Plaintiff DASE Blinds (“DASE”) is a family-owned and operated Bloomin’ Blinds
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`franchise based in Carrollton, Texas providing custom window treatments and repairs. DASE
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`employs a number of executive, administrative, and/or professional employees who are lawfully
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`exempt from overtime under the FLSA as it is currently enforced by the U.S. Department of Labor.
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`Some of DASE’s exempt employees, who are paid on a salary basis and perform exempt job duties,
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`earn salaries above the threshold specified in the Department’s current overtime rule, but less than
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`the amounts specified in the 2024 Rule. DASE will face increased labor costs and harm to its
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`employee relations because currently exempt employees will lose their exempt status unless the
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`company dramatically increases its salary structure to the levels mandated by the new Rule.
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`20.
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`As a result of the new Overtime Rule, all of the Plaintiffs and/or their identifiable
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`member employers will be irreparably harmed in their ability to maintain the overtime exemption
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`for executive, administrative, and professional employees whose job duties would otherwise
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`qualify them for exemption from overtime payments under the FLSA. Plaintiffs and their members
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`will incur legal, payroll, and accounting costs to comply with the new Rule, both before and after
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`its effective date. They will also suffer irreparable harm to their ability to manage their businesses
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`due to the loss of flexibility in the hours worked by previously exempt executive, administrative,
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`professional, and computer employees and the forced conversion of millions of previously exempt
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`salaried employees to an hourly basis.
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`21.
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`Defendant Julie Su is functioning as the Acting Secretary of the Department of
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`Labor, although she has not been confirmed by the Senate to that position.
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`22.
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`Defendant Jessica Looman is the Administrator of the Wage and Hour Division of
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`the U.S. Department of Labor, which promulgated the challenged rule.
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`23.
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`Acting Secretary Su and Administrator Looman are sued in their official capacities
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`and the relief sought extends to all of their successors, employees, officers, and agents.
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`24.
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`Defendant U.S. Department of Labor is an agency of the United States and
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`published the 2024 Overtime Rule in the Federal Register.
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`JURISDICTION, VENUE, AND STANDING
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`25.
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`This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. §
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`1331, because it is a civil action arising under the Constitution and laws of the United States,
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`including the FLSA, 29 U.S.C. § 201 et seq., and the APA, 5 U.S.C. § 501 et seq.
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`26.
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`This Court is authorized to award relief under the APA, 5 U.S.C. §§ 701-706 and
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`the Declaratory Judgment Act, 28 U.S.C. §§ 2201-2202.
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`27.
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`Venue is properly vested in this Court pursuant to 28 U.S.C. § 1391(e) because one
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`or more of the Plaintiffs are based within the judicial district of this Court, and because this is a
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`related case to the Nevada v. Dep’t of Labor litigation, in which most of the trade association
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`Plaintiffs participated.
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`28.
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`In Nevada II, this Court held that the trade association plaintiffs had standing to
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`challenge the Department’s rulemaking due to harm caused by drastically increasing the minimum
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`salary required to exempt EAP employees from overtime requirements. The Court specifically
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`found that these and other similarly situated business associations and their members “would incur
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`significant payroll, accounting, and legal costs to comply with the Final Rule, both before and after
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`its effective date” and an increase in the salary threshold “would affect how [the associations] and
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`their members manage executive, administrative, and professional capacity employees who now
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`qualify for overtime pay.” Nevada II, 275 F. Supp. 3d at 800.
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`29.
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` Most of the association Plaintiffs have organizational standing in their own right
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`as employers of exempt employees whose status will be directly affected by the new Rule. As a
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`direct consequence of the new Rule, such Plaintiffs will face increased labor costs because, like
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`their members, as employers they are subject to the minimum wage, overtime, and recordkeeping
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`requirements imposed by the FLSA with respect to currently exempt employees who will become
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`non-exempt under the new Overtime Rule.
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`30.
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`All of the association Plaintiffs have standing to bring this lawsuit on behalf of their
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`various members. This is because association Plaintiffs’ members have standing to sue in their
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`own right due to increased costs they will suffer under the Rule, including required minimum wage
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`and overtime wages for exempt employees who will be converted to non-exempt status under the
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`Rule, as well as substantial costs as they modify their businesses to comply and to account for
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`those risks. Plaintiffs and their members are effectively the object of regulation under the Rule,
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`and as such, will be directly injured by its heightened burdens and new regulatory requirements.
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`See, e.g., Contender Farms, L.L.P. v. U.S. Dep’t of Agric., 779 F.3d 258, 264 (5th Cir. 2015) (“If
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`a plaintiff is an object of a regulation there is ordinarily little question that the action or inaction
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`has caused him injury, and that a judgment preventing or requiring the action will redress it.”).
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`31.
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`In addition, the Rule conflicts with each association Plaintiff’s policy objectives,
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`challenging the Rule is germane to each association Plaintiff’s purpose, and neither the claims
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`asserted nor the relief requested requires association Plaintiffs’ individual members to participate,
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`as this complaint raises questions of law based on the Administrative Record. Accordingly,
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`association Plaintiffs each have associational standing. See Hunt v. Washington State Apple
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`Advertising Commission, 432 U.S. 333, 343 (1977) (setting out three-prong test for associational
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`standing).
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`FACTUAL BACKGROUND
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`A.
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`The FLSA’s Exemption of Executive, Administrative, Professional, and
`Computer Employees, As Applied By This Court in 2017.
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`32.
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`The Fair Labor Standards Act, enacted by Congress in 1938 during the Great
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`Depression, generally requires covered employers to pay their employees at least the federal
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`minimum wage (currently $7.25 per hour) for all hours worked, and requires overtime pay to
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`nonexempt employees at one and one-half an employee’s regular rate of pay for all hours worked
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`over 40 in a single workweek. See 29 U.S.C. § 206 (minimum wage), § 207 (overtime).
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`33.
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`Among many other exemptions from the minimum wage and/or overtime
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`requirements, Congress created the EAP exemption for “any employee employed in a bona fide
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`executive, administrative, or professional … capacity, or in the capacity of outside salesman (as
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`such terms are defined and delimited by regulations of the Secretary), subject to the provisions of
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`[the APA].” 29 U.S.C. § 213(a)(1). Congress did not make reference to any minimum salary test
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`to further restrict the EAP exemption.
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`34.
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`As this Court further observed in Nevada II, 275 F. Supp. 3d at 805-06:
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`Congress unambiguously intended the exemption to apply to employees
`who perform ‘bona fide executive, administrative, or professional capacity’
`duties. *** Specifically the Department’s authority is limited to determining
`the essential qualities of, precise signification of, or marking the limits of
`those “bona fide executive, administrative, or professional capacity”
`employees who perform exempt duties and should be exempt from overtime
`pay. With this said, the Department does not have the authority to use a
`salary-level test that will effectively eliminate the duties test as prescribed
`by Section 213(a)(1). *** Nor does the Department have the authority to
`categorically exclude
`those who perform “bona
`fide executive
`administrative, or professional capacity” duties based on salary level alone.
`In fact, the Department admits, “the Secretary does not have the authority
`under the FLSA to adopt a ‘salary only’ test for exemption.”
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`35. While the Court acknowledged the Department’s use of a “permissible minimum
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`salary level” under the Fifth Circuit’s holding in Wirtz v. Mississippi Publishers Corp., 364 F.2d
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`603, 608 (5th Cir. 1966) (now being revisited by the Fifth Circuit in the Mayfield case), this Court
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`rightly found that the Department’s longstanding policy requires the minimum salary level to be
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`used only as a floor to “screen[] out the obviously nonexempt employees, making an analysis of
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`duties in such cases unnecessary.” 275 F. Supp. 3d at 806, citing Harry Weiss, Report and
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`Recommendations on Proposed Revisions of Regulations, Part 541, at 7-8 (1949). This Court
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`accordingly held that “any new figure recommended should also be somewhere near the lower end
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`of the range of prevailing salaries for these employees.” Id., citing Weiss, at 11-12.5
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`5 Consistent with this Court’s holding, between 1940 and 2019, DOL has with few exceptions set
`the minimum salary level for exemption by studying the salaries actually paid to exempt
`employees and setting the minimum salary at no higher than the 20th percentile in the lowest-wage
`regions, the smallest size establishment groups, the smallest-sized cities, and lowest-wage
`industries. See “Defining and Delimiting the Exemptions for Executive, Administrative,
`Professional, Outside Sales and Computer Employees,” 84 Fed. Reg. 51230, 51235-37 (Sept. 27,
`2019) (detailing historic development and application of salary test methodology). The unlawful
`2016 Rule sought to set the minimum EAP salary at the 40th percentile of earnings of full-time
`salaried workers in the lowest wage Census region (the South).
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`36.
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`Based upon the foregoing legal analysis in Nevada II, this Court found that it was
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`unlawful for the Department to increase the minimum salary level from $455 per week ($23,660
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`annually) to $913 per week ($47,476 annually). The Court held that “this significant increase
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`would essentially make an employee’s duties, functions, or tasks irrelevant if the employee’s salary
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`falls below the new minimum salary level.” The Court took particular note that “entire categories
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`of previously exempt employees who perform bona fide executive, administrative, or professional
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`capacity duties would now qualify for the EAP exemption based on salary alone.” 275 F. Supp. 3d
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`at 806 (citing the Department’s 2016 Rule which estimated that 4.2 million workers would have
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`lost their exempt status solely because of the increased salary threshold).
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`37.
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`In 2019, after notice-and-comment rulemaking, the Department issued a new
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`regulation, still in effect, raising the EAP salary threshold to $35,568 and the HCE to $107,432.
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`See “Defining and Delimiting the Exemptions for Executive, Administrative, Professional,
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`Outside Sales and Computer Employees,” 84 Fed. Reg. 51230 (Sept. 27, 2019) (the “2019 Final
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`Rule”). The 2019 Final Rule used the identical methodology used in the 2004 Final Rule, setting
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`the threshold at the 20th percentile of full-time salaried workers in the lowest-wage census region
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`(the South) and/or in the retail industry nationally using current data. That increase was
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`nevertheless challenged in the Mayfield case on the ground that the statute does not authorize any
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`minimum salary threshold for EAP exemption. The district court declined to enjoin the rule under
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`the precedent of Wirtz, and the appeal from that decision is pending before the Fifth Circuit.
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`
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`D.
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`38.
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`The 2024 Overtime Rule
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`Notwithstanding the statutory mandate, longstanding regulatory precedent, and the
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`prior decisions of this Court, DOL published its new Overtime Rule on April 26, 2024. Just as the
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`enjoined 2016 Overtime Rule purported to do, the 2024 Rule establishes a minimum salary test
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`that will exclude from the white-collar exemptions millions of currently exempt EAP workers.
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`This time, the Department has adopted without rational basis a minimum salary set at thirty-five
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`percent or more of all salaried workers in the southern census region (which includes Maryland,
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`the District of Columbia, and Virginia, three of the top ten median income states). Under the new
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`Overtime Rule, effective January 1, 2025, the minimum salary for exempt employees will increase
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`65 percent, from $684 per week to $1,128 per week ($35,568 to $58,656, annualized). See 89 Fed.
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`Reg. at 32971.
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`39.
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`At $1,128 per week, the new minimum salary level will result in defeating the
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`exemption for more than four million individuals who could reasonably be classified as bona fide
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`executive, administrative, or professional employees on the basis of their duties.6 Just as in 2017,
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`the Department’s new salary threshold is so high that it is no longer a plausible proxy for delimiting
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`which jobs fall within the statutory terms “executive,” “administrative,” or “professional.” The
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`2024 Overtime Rule thus contradicts the congressional requirement to exempt such individuals
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`from the minimum wage and overtime requirements of the FLSA.
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`40.
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`In an implicit acknowledgement that its new minimum salary level will exclude
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`many employees who perform exempt job duties, the 2024 Rule permits employers to count
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`nondiscretionary bonuses, incentives, and commissions toward up to ten percent of the minimum
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`salary level for exemption. See 89 Fed. Reg. at 32972 (29 C.F.R. § 541.602). However, this
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`provision fails to prevent the Rule’s radical departure from the intent of Congress as expressed in
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`6 DOL projects that in the first year that the 2024 Rule is effective, more than four million
`employees all over the country will lose their exempt status. See 89 Fed. Reg. at 32900 & Table 4.
`By Year 10, because of the automatic increases to the minimum salary level, DOL predicts that
`almost 6 million employees will have lost their exempt status. Id. These numbers are closely
`proximate to the number of employees who this Court found would unlawfully be deprived of their
`exempt status in 2017.
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`the statutory exemption. In particular, the inclusion of bonuses, incentives, and commissions is so
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`restricted that it fails to mitigate and actually exacerbates the impact of the new Overtime Rule’s
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`exclusion of millions of employees who perform exempt duties, because it arbitrarily excludes
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`discretionary bonuses, incentives, and commissions that may constitute more than ten percent of
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`an exempt employee’s salary, as well as a host of other types of compensation (e.g., profit-sharing,
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`stock options