The Fair Labor Standards Act (“FLSA”) is a federal statute setting forth a minimum wage and requiring employers to pay overtime rate of time-and-a-half for non-exempt employees who work more than 40 hours in a week. Certain employees may be classified as exempt from this required overtime pay if they make above a certain salary level and perform primarily executive, administrative, or professional duties (as defined by the rule). Previously, the salary threshold for exempt employees was $23,660. However, in an effort to modernize existing regulations, the Obama administration directed the Department of Labor (“DOL”) to update the federal overtime rule and its exemptions. The DOL’s new rule (the “Final Rule”), which was scheduled to take effect on December 1, 2016, purported to increase the minimum salary for exempt employees to $47,476. This change greatly expanded the number of workers who would no longer be classified as exempt, meaning employers would be required to pay them according to the mandatory overtime regulations.
In November 2016, over 50 businesses and 21 states filed suit in federal court in Texas to prevent the DOL from implementing the Final Rule, arguing that the DOL exceeded its authority by doubling the minimum salary threshold for employees to be classified exempt. The court issued a preliminary injunction just days before the Final Rule was set to take effect, temporarily blocking its enforcement nationwide. State of Nevada v. U.S. Dept. of Labor, No. 4:16-CV-00731, November 22, 2016, available at http://www.txed.uscourts.gov/sites/default/files/notable/Memorandum%20Opinion%20and%20Order%20.pdf.
Since that time the Texas litigation has continued, while the future of the Final Rule remained uncertain - until just recently. On August 31, 2017 a federal court judge issued a final judgment nullifying the DOL’s Final Rule. The court held that while the DOL has the authority to adjust the salary level requirement, Congress’s intent was not served by implementing a salary level that effectively discharged the inquiry into an employee’s primary duties. Several days later the DOL filed a motion to withdraw its appeal of the order issued in November 2016. The Fifth Circuit Court granted the DOL’s motion and dismissed the case, signaling an end to the year long legal battle.
Although surrendering its position on the Final Rule, the DOL has been receiving comments and will likely propose a new overtime law soon. Employers should be on the lookout for such rule to ensure compliance if and when it is announced. Additionally, employers should keep in mind that this federal court ruling does not affect or change any local or state laws regarding mandatory minimum wage and overtime requirements.
This article is presented by the Dallas employment lawyers at Clouse Dunn LLP. To speak to an employment attorney about an overtime matter, send an email to [email protected] or call (214) 239-2705.
About Keith Clouse / Dallas Employment Lawyer Keith Clouse
Keith Clouse is a Texas employment law specialist with over 25 years of experience representing senior executives, business owners, physicians, and corporations in complex employment litigation, arbitration and negotiations. Senior executives, physicians and other professionals consistently rely on Mr. Clouse for employment law expertise and advice on employment contracts, covenants not to compete, severance agreements, trade secret disputes, breach of fiduciary duty claims, and claims based on workplace discrimination, retaliation and harassment. Source CDKLawyers.com
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