• Related Professionals -

eLABORate: Federal Judge Rules Obama Administration's Expanded Overtime Rule Invalid

September 01, 2017

The same Texas federal judge who initially enjoined enforcement of the Department of Labor’s (“DOL”) controversial expanded overtime rule back in November 2016, ruled on August 31, 2017 in favor of business groups and states, finding that the DOL “exceeded its authority”, and that the Obama administration policy was “invalid.”

The rule would have changed the minimum salary needed for white collar employees to be exempt from the overtime protections of the Fair Labor Standards Act (“FLSA”). Under the now-invalidated rule, the minimum salary for exempt employees jumped from $455 per week ($23,660 per year) to $913 per week ($47,892 per year), with further increases set to occur every three years beginning in 2020. The rule was to have gone into effect December 1, 2016.

In his ruling, U.S. District Judge Amos Mazzant noted that under the FLSA, determining whether employees are exempt from overtime requires analyzing whether the duties they perform meet the test for the executive, administrative, or professional (“EAP”) exemption under the Act. Judge Mazzant held the DOL’s rule would make the FLSA’s duties test meaningless:

This is not what Congress intended with the EAP exemption. Congress unambiguously directed the Department to exempt from overtime pay employees who perform “bona fide executive, administrative, or professional capacity” duties. However, the Department creates a Final Rule that makes overtime status depend predominately on a minimum salary level, thereby supplanting an analysis of an employee’s job duties.

While business and industry groups applauded the revised salary requirements being put on hold last year, uncertainty remained as to whether it was a temporary delay. That uncertainty has been eliminated for now. The DOL has the right to file an appeal, but it is unclear yet whether it will do so. We will provide an update once its intentions are clear.