November 8, 2017
There have been new developments in litigation over changes to regulations under the Fair Labor Standards Act (FLSA) that specify which workers are eligible for overtime pay.
Readers of our Mid-Week Memo will recall that last year the U.S. Department of Labor (DOL or Department) under the Obama Administration issued a controversial final overtime rule. The rule, which was set to go into effect on Dec. 1, 2016, was challenged in court because it would have more than doubled the minimum salary requirement for the main white-collar exemptions from overtime to $47,476 per year, and it would have resulted in an estimated four million additional workers being eligible for overtime pay.
On Nov. 22, 2016, just days before the new rule was set to go into effect, Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas, issued a nationwide injunction against implementation of the new rule. And, on Aug. 31, 2017, Judge Mazzant issued a summary judgment ruling that invalidated the revised regulations, finding that President Obama’s DOL had exceeded its authority in issuing them. (For more on developments in this case through this past summer, see our article here.)
Last week, on Oct. 30, 2017, the DOL under the Trump Administration appealed Judge Mazzant’s ruling invalidating the overtime rule to the U.S. Court of Appeals for the Fifth Circuit. And, on Nov. 3, 2017, the Department filed a motion to hold the appeal in abeyance, in effect asking the appeals court not to issue a ruling while the DOL, in its own words, “undertakes further rulemaking to determine what the salary level should be.”
The Department’s recent actions are not a surprise, and they indicate two things:
First, regardless of the party in power, the DOL wants to preserve its authority to specify which workers are eligible for overtime pay and to set a minimum salary for overtime exemptions; and
Second, the DOL under the current administration is preparing its own overtime rule and it needs more time to decide on the appropriate minimum salary, and perhaps other parameters, for overtime exemptions.
The Labor Secretary appointed by President Trump, Alexander Acosta, has indicated that he would favor a minimum salary of approximately $30,000 to $35,000 for overtime exemptions, which he considers more reasonable than the $47,476 minimum that the prior administration tried to enact.
We will continue to monitor the overtime rule litigation at the appellate level and to communicate with our readers about the DOL’s efforts to issue a new overtime rule.
Our Insights are published as a service to clients and friends. They are intended to be informational and do not constitute legal advice regarding any specific situation.