OBAMA ADMINISTRATION’S OVERTIME REGULATION BLOCKED BY FEDERAL COURT

Posted: November 23, 2016 | by Kraig M. Schutter 

As we have previously reported, the Obama administration’s Department of Labor amended federal regulations regarding the white collar overtime exemption.  The existing white collar regulations exempt employees who perform executive, administrative, or professional duties, and who are paid at least $23,660 annually, from the requirement to pay overtime wages.  The Department of Labor’s new regulations increased the minimum annual salary requirement to $47,476.  The change was set to take effect December 1, 2016.  However, on November 22, 2016, a federal district court in Texas issued a preliminary injunction which prohibits the Department of Labor from enforcing the new regulations at this time. 

The preliminary injunction is the result of lawsuits filed by a group of more than 50 business groups and 21 states seeking to invalidate the new regulations.  The main argument advanced by the plaintiffs was that Congress had clearly expressed its intent to exempt employees who perform executive, administrative, or professional duties from the Fair Labor Standards Act’s (FLSA) overtime requirements; and that the law did not actually require a minimum salary in order for the overtime exemption to apply.  Therefore, the plaintiffs asserted that the Department of Labor did not have authority to impose an additional salary threshold via the new federal regulations.

While the court did not completely side with Plaintiffs, it did conclude that the increased salary level imposed under the Department of Labor’s new regulations was so high that it effectively supplanted consideration of the type of duties performed by employees.  That is, the minimum salary aspect of the new regulations, standing alone, effectively imposed a requirement that many employees who do perform bona fide executive, administrative, and professional duties would receive overtime pay.  Because of this, the federal court concluded that the Department of Labor overstepped its authority in implementing the new regulation and issued a nationwide injunction preventing the regulation from being enforced.   

Fortunately for employers, the federal court’s ruling grants a reprieve from the new overtime regulation.  For the time being, employers do not have to increase the salary paid to overtime exempt employees.  It is also expected that the Trump administration will not seek to upset the injunction.  However, it is possible that the preliminary injunction could be lifted in the future.  If this occurs and the Department of Labor’s regulation is re-implemented, employers will be required to adjust their pay practices in the future.  Of course, we will apprise you of any developments regarding this important issue. 

If you have any additional questions regarding the federal overtime regulation, or any other labor or employment related matter, contact Masud Labor Law Group.

Kraig M. Schutter

Kraig is a dedicated professional with 20 years of success in solving problems and representing clients in various labor and employment law concerns. His “sub-specialties” include union avoidance, grievance arbitration, employment policies development, as well as wage and hour matters, …
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This article is published by the Masud Labor Law Group, and is intended as general information only.  This article is not intended to provide legal advice or opinion, as such advice may only be given when related to specific fact situations.  Questions or comments concerning this article should be directed to the Masud Labor Law Group, 4449 Fashion Square Blvd., Ste. 1, Saginaw, Michigan, 48603, (989) 792-4499.  E-Mail: .(JavaScript must be enabled to view this email address). ©Masud Labor Law Group 2011.  All rights reserved.  Reproduction of this article in whole or in part, without express permission from the Masud Labor Law Group is prohibited.

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