Federal Court Blocks New Overtime Rules

On Thursday, August 31, 2017, a Texas federal court likely put the final nail in the coffin for the Obama administration proposed rule changes to the Fair Labor Standards Act and its rules regarding overtime. Commonly known as the “white collar” overtime exemptions, the proposed rule would have more than doubled the salary amount for employees to meet the overtime exemptions.

Specifically, the Department of Labor’s overtime rule would require the employer to pay employees overtime if they less than $913 per week (or $47,476 a year). Currently, employees only need to earn $455 every week, or $23,660 yearly, to meet the exemption criteria.

In striking down the rule, the court announced that the DOL does not have “the authority to categorically exclude those who perform bona fide executive, administrative, or professional capacity duties based on salary level alone.” Instead, the DOL’s sole dependence on pay “would basically make a representative’s obligations, duties, or tasks unimportant.” The court in this way found the control “unlawful” as it would have violated the purpose of the FLSA.

The Trump Administration Labor Department is not expected to appeal the court’s ruling. The DOL is apparently, as of now, rethinking whether to issue a new rule with a less dramatic salary requirement increase.