Many thanks to Arslan Sheikh for his assistance in preparing this post.
Last week, a federal judge in Texas struck down a proposed Obama-era rule that would have expanded the number of workers who qualify for overtime pay under the Fair Labor Standards Act (FLSA).
The proposed rule
In 2016, the Obama administration’s Department of Labor (DOL) planned to implement a new rule that would have more than doubled the minimum salary threshold for “exempt” status under the FLSA from $23,660 to $47,476 per year. Under the DOL’s proposed rule, an employee who made an annual salary below $47,476 would have been entitled to overtime pay for all hours worked beyond 40 a week. We last reported on the proposed salary increase in November of 2016, when federal court Judge Amos Mazzant of the Eastern District of Texas issued a nationwide preliminary injunction against the DOL’s rule. Our blog post outlines the Texas court’s holding and rationale.
What happened this week?
On Aug. 31, Judge Mazzant issued another decision, striking down the Obama administration’s proposed salary threshold rule. As a result, the minimum salary for exempt status under the FLSA will remain, for the time being at least, at $23,600.
Judge Mazzant held that the DOL exceeded its authority by issuing the proposed rule because the department focused too heavily on employees’ salary-levels, rather than their job duties, to determine if they were exempt from overtime under the FLSA. Judge Mazzant struck down the rule, holding that because the DOL’s proposed rule would have doubled the annual salary threshold from $23,660 to $47,476, it would have made salary-level the predominant factor in determining who is exempt from overtime under the FLSA. It should be noted, however, that Judge Mazzant did not rule on the general lawfulness of a salary-level test; he only evaluated the salary-level test the DOL proposed in this instance.
What happens next?
On Sept. 5, the Department of Justice (DOJ), at the direction of President Trump and Attorney General Sessions, asked the 5th Circuit Court of Appeals to dismiss its appeal of Judge Mazzant’s 2016 preliminary injunction. On Sept. 6, the 5th Circuit agreed to dismiss the appeal.
The DOJ still has the option to appeal Judge Mazzant’s Aug. 31 decision, however. In the seemingly unlikely event that the Trump administration is unhappy with the parts of the decision that appear to limit the DOL’s authority or wants more guidance as to how the DOL can lawfully use salary-levels to determine overtime eligibility, the DOJ may appeal Judge Mazzant’s most recent decision to the 5th Circuit.
Will the DOL issue a new rule?
Based on the facts at hand, all signs point to “yes.” Current Secretary of Labor Alexander Acosta stated during his confirmation hearing that he believes the salary threshold figure should be “somewhere around $33,000.” Secretary Acosta further indicated that the DOL will review the rule, and the DOL backed up the secretary’s comments in July by issuing a request for information seeking public comments on ways to revise the Obama administration’s proposed rule.
Takeaways
The $23,600 threshold will remain the law for the foreseeable future. If the DOL decides to increase the salary threshold in the coming months, however, they will raise it more moderately than the Obama administration did. We will be sure to provide any updates that may arise.