Overtime Rule Update 092817

In May 2016, I wrote about the changes the Obama Administration had made to the overtime rule in the Fair Labor Standards Act (FLSA) which were set to take effect on December 1, 2016. You can read that post here. In short, the changes more than doubled the threshold salary level for employees to be exempt from overtime pay, increasing from $23,660 annually ($455 weekly) to $47,476 annually ($913 weekly). The rule also provides that that minimum salary would increase automatically every three years. The effect of increasing the threshold so dramatically is that overtime pay would be extended to over 4 million “white collar” employees previously exempted from it.

However, the new overtime rule was never implemented. As you can read in a post from November 2016 here, less than two weeks before the rule was set to take effect, a federal district court in Texas stopped it in its tracks when it issued a nationwide preliminary injunction after 21 states and a coalition of business groups challenged the rule. Additionally, after President Trump took office, his administration expressed disagreement with the new overtime rule, and subsequently withdrew the appeal of the issuance of the injunction filed by the Obama Administration.

While the Trump Administration stated that it did not disagree with some increase to the salary threshold, it took issue with raising the salary limit so significantly and with increasing that limit automatically every three years thereafter. In fact, the administration published a Request for Information at the end of July 2017 through which it sought input from those impacted by the rule; the Administration sought public comment on several specific questions.

The latest event in the overtime saga occurred earlier this month, when the same federal district court in Texas that issued the temporary injunction invalidated the Obama Administration’s overtime rule. The court held that the significant increase would essentially make an employee’s duties, functions, or tasks irrelevant if his/her salary fell below the new minimum salary level, and that that result is not what Congress intended when it created the “white collar” exemptions from overtime pay in the FLSA.

We will keep you updated on what, if anything, comes from the Trump Administration’s request for public comment. There may still be an increase in the salary threshold under President Trump, albeit less significant than that sought by President Obama.

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