23 November 2016
Texas Court blocks the $47,476 Overtime ruling
The Obama Administration made changes to the overtime rulings under the Fair Labor Standards Act (FLSA). The change increased the overtime minimum exempt threshold from $23,600 to $47,476 annually.
However today a federal court judge in Texas has placed a temporary injunction preventing the Department of Labor (DOL) from implementing these changes due to 21 states and multiple business groups bringing forth a case to stop these changes. The temporary injunction has been implemented on a national level.
The Judge’s reasoning – a recap:
- The DOL overreached its authority by raising the minimum salary threshold with an automated increase mechanism
- Congress had intended that the Executive, Administrative and Professional (EAP) exemptions to be determined based on the workers duties with the salary level being secondary. The new rule would have the exemption apply to any workers in the 40th percentile or lower of wage earnings which almost eliminates the entire reason for the exemption which was to exempt those workers who are performing executive, administrative or professional duties.
- Employers would suffer immediate harm if they were forced to increase salaries by such a drastic difference or cut back on hours worked which could impact business.
- If Congress wanted to have the determination for EAP exemption to be based on a salary level that increases to keep up with modern times, they would have done so when creating the rule or included a scheme to account for such increases.
Potential Next Moves:
- The DOL appeals the court decision which could end up in reverse and the injunction is lifted and then the matter goes back to the lower lourt to be litigated
- Congress may come up with some kind of compromise bill (there’s been talk that they may look at increasing the salary threshold in increments)
- The DOL does nothing and continues with litigation, in which case the judge likely will issue a permanent injunction and the law will not be enacted
- Trump may look to address this when he formally takes office
PGC will issue further updates as new information comes in which will affect you and your workforce. Feel free to reach out should you have any questions.