Employers, the wait is over. You finally have an answer regarding the 2016 overtime regulations. Yesterday afternoon, a Texas federal judge issued an order invalidating the U.S. Department of Labor’s overtime rules that had been set for implementation on December 1, 2016, but preliminarily stopped nationwide only days before by that same judge.
As noted in our earlier blog posts (“Breaking News: Federal Judge Halts Implementation of the DOL’s New Overtime Regulations” from November 23, 2016, and “2016 Overtime Regulations: They Are Still Out There” from June 13, 2017), the DOL had issued a final rule that was predicted to affect over 4.2 million workers, with Florida as the third most affected state. Those workers would no longer be exempt from overtime compensation due to increases in the minimum salary level for “white collar” exemptions from $455 per week ($23,660 annually) to $913 per week ($47,476 annually) and highly compensated employees from $100,000 to $134,000 annually.
The DOL quickly appealed the preliminary injunction to the Fifth Circuit Court of Appeals, which left employers wondering whether the hold would be lifted by the appellate court or the appeal withdrawn. The uncertainty increased on July 25, 2017, when the DOL published a formal Request for Information so the DOL could issue a new proposal related to overtime regulations.
In the order, the court granted summary judgment to the business group and other plaintiffs who had challenged the new overtime rules and issued a final judgment on their behalf. The court held that the white-collar exemptions were intended to apply to employees who perform “bona fide executive, administrative, or professional capacity” duties and that the DOL does not have the authority to use a salary level test that will effectively eliminate the duties test or exclude those who perform the duties based on salary level alone. Because the new overtime rules would have “exclude[d] so many employees who perform exempt duties” and are “not based on a permissible construction of [the law]”, the DOL did not carry out Congress’s unambiguous intent, exceeded its authority, and has “gone too far” with the rules. In sum, the overtime rules have been overruled and may be disregarded by employers.
Read the full order here.