Decision strikes another blow to Labor Department's “overtime rule”
On August 31, 2017, a federal judge in Texas struck down the controversial change to the Fair Labor Standards Act that was intended to substantially raise the minimum salary threshold required for employees to qualify for the “white collar” exemptions. The same federal court that had issued a preliminary injunction in November 2016 blocking implementation of the Obama Administration's revised overtime rule, granted the plaintiffs' motion for summary judgment, ending the case and leaving the injunction in place.
In May 2016, the U.S. Department of Labor (DOL) unveiled the details of its final revised regulations defining the “white collar” exemptions from the federal Fair Labor Standards Act's (FLSA's) overtime and minimum-wage requirements. The three primary tenets of the regulations included:
- the minimum salary threshold an employer must pay in order to characterize an employee, otherwise meeting the duties requirements, as exempt would increase from $455 to $913 per week, (up from $23,660 to $47,476 per year.
- the minimum salary amount would be “updated” every three years (likely increased), with the first update scheduled for January 1, 2020.
- new regulations to take effect December 1, 2016.
However, on November 22, 2016, Eastern Texas District Court Judge Amos Mazzant granted a nationwide preliminary injunction to block the DOL's rules. Judge Mazzant stated that it was improper for the Labor Department to adopt a salary test that categorically excludes a substantial number of workers who meet the exemptions' duties-related requirements. He also concluded that the DOL overstepped its authority when it issued the rule, agreeing with arguments brought forth by a series of state attorneys general and pro-business groups.
District Court's Ruling on Original Litigation
While appeals continue in various districts across the country, the original litigation that sought to strike down the rule for good, continued in an Eastern Texas district court. In the district court's ruling last week, Judge Mazzant noted that Congress delegated to the USDOL the role of determining the essential qualities of who would qualify for this exemption, however “the Department does not have the authority to use a salary-level test that will effectively eliminate the duties test.” The district court's reasoning was similar to its reasoning in the order granting the injunction.
Judge Mazzant concluded that the new salary-level test did not give effect to Congress's intent because, by more than doubling the previous minimum salary level, it would “essentially make an employee's duties, functions, or tasks irrelevant if the employee's salary falls below the new minimum salary level.” Judge Mazzant also concluded that the 2016 rule's provision that would automatically increase the minimum threshold for exemption every three years also exceeds its authority under the FLSA and therefore is unlawful.
While the DOL has announced that it will no longer support the original rule as proposed, California employers should still be prepared for coming changes. The Department of Labor will likely propose another version of the rule in the coming months and has already asked for public input on the minimum salary test. Further, the 5th Circuit Court of Appeals is scheduled to hear oral arguments on the appeal from Judge Mazzant's November injunction in the coming weeks. Comments from advocacy groups and those in favor of the overtime rule will likely play a part as appeals continue across the country.
The experienced California employment lawyers at Kingsley & Kingsley will continue to follow these and other developments at the Labor Department and determine their impact on California's labor laws. In the meantime, to discuss these laws, or a related claim on your behalf, feel free to call us toll-free at (888) 500-8469 or click here to contact us via email.