Federal Court Strikes Down Overtime Rule

On August 31, 2017, a U.S. District Court in Texas granted a summary judgment against the Department of Labor (DOL) in the consolidated cases challenging the increase in the salary threshold to $47,476 for classifying certain positions as exempt from overtime. The court held that the DOL exceeded its authority and concluded that the final rule is invalid. This same court had issued a temporary injunction in November of 2016 that blocked the increase from taking effect on December 1, 2016.

What’s next? As reported in our last month’s newsletter, the DOL is currently accepting comments on its Request for Information (RFI) through September 25, 2017. At this point, DOL has received over 124,000 comments. The purpose of the RFI is to ask the public for information that will help DOL in formulating a proposal to revise the FLSA regulations. The RFI asks for feedback on questions pertaining to the minimum salary threshold as well as to the duties test, verifying cost-of-living in different parts of the U.S., inclusion of non-discretionary bonuses and incentive payments for satisfying part of the minimum salary threshold, the salary test for highly compensated employees, and automatic updating of the minimum salary threshold. DOL Secretary Acosta has said that the salary threshold should be increased, but not to the $47,476 level. During confirmation hearings, DOL Secretary Acosta discussed the low $30,000’s as a possibility.

The PS&A team will keep you informed as developments on this important topic occur.