Overtime Exemption Rule on Life Support

DOL won’t defend Obama-era rule

Posted July 5, 2017

On Friday, June 30, the Department of Labor (DOL) filed a Reply Brief to the Fifth Circuit Court of Appeals stating that the DOL will not defend the overtime exemptions rule issued in May 2016.

This doesn’t mean, however, that the appeal is being dropped completely. In a somewhat unconventional request, the DOL is asking the Fifth Circuit to overturn the preliminary injunction, affirming the DOL’s right to establish a salary threshold. The agency is also asking the court to ignore the validity of the rule put forth in May 2016.

The reason? When the rule was put on hold in November 2016, the federal District Court ruled that the DOL does not have the authority to set a salary threshold at all under the Fair Labor Standards Act (FLSA). The DOL argues that this decision was incorrect and would like to affirm its right to set a threshold.

Background

The overtime exemption rule was finalized in May 2016, requiring employers to pay employees classified as exempt under the executive, administrative, or professional exemptions (also known as the white-collar exemptions) a minimum annual salary of $47,476. This new requirement more than doubled the previous threshold of $23,660.

Two lawsuits were filed in September challenging the overtime rule, and on November 22, 2016, a federal judge for the Eastern District of Texas issued a preliminary injunction, putting a nationwide, temporary hold on the rule.

The DOL’s appeal

Under the Obama administration, the DOL immediately appealed the injunction, but the Trump DOL requested several delays in filing its reply brief in the appeal to allow new Secretary of Labor Alexander Acosta time to evaluate the rule.

Request for Information

In the meantime, on Wednesday, June 28, the DOL submitted for review a Request for Information (RFI) on the overtime rule to the Office of Information and Regulatory Affairs (OIRA). The RFI will likely ask employers for feedback on how increasing the exemption salary level to $913 per week would have affected their business.

Once the review is complete, the RFI will be published in the Federal Register and employers will be given the opportunity to comment to the DOL.

What’s next

It’s uncertain how the Fifth Circuit will respond to the DOL’s arguments. It could grant the DOL’s request, ignoring the 2016 overtime rule and giving the Department the power to set a salary threshold it deems appropriate.

Responses to the RFI could influence the DOL’s position on its next move. The agency could withdraw the 2016 final rule, retain the current rules in effect, or propose a new rule.

From here, the court could go in any number of directions. While the minimum annual salary threshold of $47,476 won’t likely stick around, the landscape surrounding the white collar exemptions will continue to take shape as this story plays out.


Wage & Hour Compliance AssessmentJ. J. Keller's Wage & Hour Compliance Assessment can help you avoid costly fines and litigation related to wage and hour violations.

 

J. J. Keller's FREE HRClicks™ email newsletter brings quick-read human resources-related news right to your email inbox.

Sign up to receive HRClicks™.