Labor rules on shaky ground in Texas after court ruling
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New workplace protections that apply across the country aren't currently enforceable in Texas.
Why it matters: Texas is at the center of new court battles, acting as a bellwether for how far Biden-era labor standards can go after a recent U.S. Supreme Court ruling gutted the power of federal agencies.
Catch up quick: Just hours after the high court's decision in Loper Bright Enterprises v. Raimondo, a judge in Texas blocked the U.S. Department of Labor from expanding overtime safeguards for state workers.
How it works: If a worker is paid a salary over a certain minimum threshold and primarily performs executive or professional duties, they don't qualify for overtime pay.
- Currently, that minimum salary is $35,568 a year. A new rule from the Labor Department was set to raise the threshold to $43,888 on July 1, and then to $58,656 in 2025.
Zoom in: But on June 28, the same day Loper was decided, a Texas judge ruled the Labor Department likely exceeded its authority — citing the Loper ruling — and temporarily halted the rule from going into effect in the state.
- It's the first ruling to apply the Supreme Court's decision, according to an analysis from law firm Jackson Lewis.
Zoom out: The decision applies only to employees of the state of Texas. The rule took effect on July 1 nationwide.
By the numbers: The new overtime rule would have applied to an estimated 88 state employees this month, and nearly 4,000 employees in 2025, per the Society for Human Resource Management.
The other side: The Labor Department "is confident that the overtime rule is consistent with [its] authority under the Fair Labor Standards Act," said spokesperson Jacob Andrejat.
What they're saying: "No worker should be denied federal overtime protections simply because an employer places them on salary," Ed Sills, communications director for the Texas AFL-CIO, told Axios.
- "In effect, the low previous threshold forced countless workers to put in overtime hours for free. Raising the threshold at least ensures that salaried workers who do not receive overtime are paid a living wage."
What we're watching: What the court's final decision will be.
Meanwhile: The future of the Federal Trade Commission's ban on noncompete agreements is also looking dicey.
- Last week, another Texas judge issued a temporary order preventing the rule from going into effect in the state.
The big picture: Employers are confused, says Thomas Muccifori, a partner at law firm Archer & Greiner.
- Some of his clients, uncertain about the future of noncompetes, are already looking at alternative options like nondisclosure agreements.
The bottom line: It'll take a long time for these cases to wind their way through the courts, but the Supreme Court's ruling is shaking up the work world, starting with Texas.