On August 31, 2017, a federal judge from the U.S. District Court for the Eastern District of Texas struck down the controversial Obama-era Department of Labor (DOL) overtime rule that had been introduced in 2016.
Through that rule, the DOL sought to expand the eligibility of employees who could earn “time-and-a-half” overtime pay for working in excess of 40 hours per week. Under the Fair Labor Standards Act (“FLSA”), workers who are paid on a salary basis of at least a minimum annual salary threshold, and who perform exempt job duties, are exempt from the eligibility for overtime pay. The current salary threshold is an annual salary of $23,660, or $455 per week. However, the DOL’s proposed regulations doubled the standard salary test—an annual salary of $47,476, or $913 per week. This meant millions of workers who were “exempt” from overtime pay would become “non-exempt” and thus entitled overtime pay.
But, the rule never took effect because on November 22, 2016, the same judge issued a preliminary injunction enjoining the DOL from implementing the rule. The Obama administration appealed the preliminary injunction to the Fifth Circuit, but once the Trump administration took office, it filed a brief with Fifth Circuit announcing its decision “not to advocate for the specific salary level ($913 per week)” and to instead “undertake further rulemaking to determine what the salary level should be.”
The Court ruled that, in part, the rule exceeded the DOL’s authority under the FLSA and was an unreasonable interpretation of the exemptions and the DOL’s power to regulate them. However, the judge did reject the Plaintiffs’ arguments that state employers should not have to follow the FLSA, as a prior Supreme Court case had already decided the constitutionality of the FLSA as it applies to states.
Following the August 31, 2017 ruling that invalidated the Obama overtime rule, the DOL moved to dismiss its pending appeal before the Fifth Circuit regarding the preliminary injunction. On Sept. 6, 2017, the Fifth Circuit granted the unopposed request of the DOL to dismiss its appeal, effectively ending the litigation regarding the Obama-era DOL overtime rule.
The DOL issued a Request for Information (RFI) seeking public input to help guide their future rulemaking, and the comment period ended on September 25, 2017.
FHKAD will continue monitoring the rulemaking process and will update employers on any developments regarding the FLSA. Please feel free to contact an FHKAD attorney with any questions at (614) 221-1216.