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Navigating the New Overtime Rules: What Texas Small Business Owners Need to Know

Attention Texas small business owners! There have been some significant changes regarding overtime pay that you need to be aware of. While a recent court order has temporarily blocked the new Department of Labor (DOL) overtime rule for government employees in Texas, private employers, including small businesses like yours, must still comply with these changes.

What Happened?

Late on June 28, 2024, Judge Sean D. Jordan of the U.S. District Court for the Eastern District of Texas issued a temporary injunction halting the implementation of the DOL’s new overtime rule for government employees in Texas. This ruling was based on the argument that the DOL exceeded its authority by drastically increasing the salary threshold and mandating automatic updates every three years. However, this order applies solely to state employees and does not affect private businesses (ADP, Fisher Phillips).

The New Overtime Rules

As of July 1, 2024, the salary threshold for the white-collar exemptions under the Fair Labor Standards Act (FLSA) has increased. The threshold has risen from $35,568 annually to $43,888 annually. Furthermore, another increase is scheduled for January 1, 2025, which will raise the threshold to $58,656 annually (Fisher Phillips).

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What This Means for Your Business

For small business owners in Texas, this means that if you have employees classified under the executive, administrative, or professional exemptions, their salary must now meet the new threshold of $43,888 annually to remain exempt from overtime pay. Here’s what you need to do:

  1. Review Employee Salaries: Ensure that any employees classified as exempt under the white-collar exemptions meet the new salary requirement.
  2. Reclassify Employees if Necessary: If you have employees whose salaries do not meet the new threshold, you may need to reclassify them as non-exempt and pay overtime for any hours worked over 40 in a workweek.
  3. Update Payroll Systems: Adjust your payroll systems to reflect the new salary threshold and ensure compliance with overtime calculations.
  4. Communicate Changes: Clearly communicate any changes to your employees, explaining how their pay or classification might be affected.

Preparing for Future Changes

The legal landscape around this rule is still evolving, and additional lawsuits could lead to broader injunctions or changes. It’s essential to stay informed about any further developments. Employer Flexible will keep you updated on all relevant news and legal proceedings.

Why Compliance Matters

Non-compliance with the FLSA can result in significant penalties and legal challenges. Ensuring your business adheres to these new rules not only keeps you compliant but also helps maintain fair labor practices, which is vital for employee morale and retention.

Staying Informed

As this situation continues to develop, it’s crucial to stay informed about any changes that could affect your business. Employer Flexible is committed to keeping you up to date with the latest information and helping you navigate these regulatory changes.

By proactively adjusting to these new rules, you can ensure your business remains compliant and continues to thrive in an evolving regulatory environment. For more detailed information and updates, be sure to follow our blog and reach out to our team if you have any questions or need assistance.


By staying proactive and informed, you can manage these changes smoothly and ensure your business remains on the right track.

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Frequently Asked Questions (FAQs):

1. What are the rules for overtime pay in Texas?

In Texas, the overtime pay rules are governed by the federal Fair Labor Standards Act (FLSA). Under the FLSA, non-exempt employees must receive overtime pay for all hours worked over 40 in a workweek. The overtime rate is at least 1.5 times the employee’s regular rate of pay. Texas does not have its own state-specific overtime laws, so the federal rules apply universally across the state.


2. What are the OT rules for 2024?

Starting July 1, 2024, the Department of Labor (DOL) has updated the salary threshold for the white-collar exemptions under the FLSA. The salary threshold increased from $684 per week ($35,568 annually) to $844 per week ($43,888 annually). This means that employees earning below this threshold must be paid overtime for any hours worked over 40 in a workweek, regardless of their job duties. Another increase is planned for January 1, 2025, raising the threshold to $1,128 per week ($58,656 annually).


3. What jobs are exempt from overtime in Texas?

Certain jobs are exempt from overtime pay requirements under the FLSA. These typically include:

  • Executive, Administrative, and Professional Employees: Employees in these categories must meet specific duties tests and be paid on a salary basis meeting the minimum salary threshold.
  • Outside Sales Employees: Employees primarily engaged in making sales or obtaining orders outside the employer’s place of business.
  • Certain Computer Professionals: Employees in computer-related occupations who meet specific criteria regarding job duties and compensation.
  • Highly Compensated Employees: Employees earning $107,432 or more annually (increasing to $132,964 in 2024), who perform at least one of the duties of an exempt executive, administrative, or professional employee.


4. What is the DOL rule for 2024?

The DOL rule for 2024 involves updating the salary thresholds for exempt employees under the FLSA. Effective July 1, 2024, the salary threshold for white-collar exemptions has increased from $35,568 annually to $43,888 annually. This update also includes future planned increases, with the next adjustment set for January 1, 2025, raising the threshold to $58,656 annually. Additionally, the threshold for highly compensated employees will also increase in 2024.



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