On August 31, 2017, a federal judge in Texas struck down an Obama-era Department of Labor rule that would have roughly doubled the salary threshold, under which all workers are guaranteed overtime under the Fair Labor Standards Act (“FLSA”), to over $47,000 per year. In fact, this is the second time that the Eastern District of Texas has blocked the rule, which was originally slated to go into effect on December 1, 2016. As reported by HR Legalist, in November of 2016, District Judge Amos L. Mazzant (an Obama appointee) issued the first order that preliminarily blocked the rule.
In yesterday’s Opinion, Judge Mazzant took a more final step, granting the Motion for Expedited Summary Judgment filed by the plaintiffs in the Texas lawsuit—a collection of business groups opposed to the rule. The court agreed with the plaintiffs that the DOL had gone too far by expanding the salary threshold beyond the authority granted to it by Congress. In doing so, the court left room for a lower salary test that would “screen out” lower-paid employees who typically do not perform executive, administrative, or professional duties, and would therefore be entitled to overtime pay. But the court was clear that the 2016 rule went against the intent of Congress.
In the meantime, Judge Mazzant’s original November ruling is still on appeal before the Fifth Circuit. As reported by HR Legalist earlier this summer, Trump administration attorneys kept that appeal alive in a limited way, indicating in a brief that the government would not defend the 2016 rule, but would be pursuing a new rule with a new, lower, salary level. Therefore, it seems likely that the administration will not appeal this latest ruling, and continue the process of developing a new, more business-friendly rule. That means that—for now—the 2004 salary threshold of $23,660 per year is still in effect.
Any further changes to the overtime exemption rules could impact how employers classify their workers and pay overtime. HR Legalist will continue to monitor this issue as it develops, both through the courts and through the rulemaking process.
Ivo Becica focuses his practice on advising employers on how to reduce litigation risk and resolve employee issues, and on defending employers in litigation if necessary. He can be reached at 215-667-6335 or email@example.com