By Rebecca Reif
On Thursday, August 31, 2017, a federal district court judge issued a ruling which effectively kills the Obama-era overtime rules under the Fair Labor Standards Act (FLSA). This ruling comes after the same judge issued a preliminary injunction in November which halted implementation of the rules while the court could further weigh the issues.
Click here for our past Client Alert on the new FLSA regulations.
Click here for our past Client Alert on the preliminary injunction.
The main points of the judge's ruling are as follows:
- The language of the FLSA exempts employees who perform "bona fide" executive, administrative, and professional ("EAP") duties. This is, at its core, a "duties" based test.
- The Department of Labor does not have the authority to pass regulations which impose a salary threshold that "effectively eliminate[s] the duties test." The new salary threshold of $913/week would entitle many workers who perform bona fide EAP duties to non-exempt status, and thus is outside the Department of Labor's rulemaking authority.
- The previous minimum salary threshold test of $433/week is not unlawful because it is at the minimal end of EAP workers' salaries, and can effectively work as a "screen" for exempt and non-exempt employees. In other words, at a lower level, salary can be a "defining characteristic" of EAP exempt status. However, the Department's new proposed salary threshold is so high it would result in employees performing "bona fide" EAP work to be entitled to overtime.
This is just one ruling in Texas, but is largely expected to be the end of the new FLSA overtime regulations. The Department of Labor is under a new presidential administration, and it appears unlikely the DOL will appeal this ruling to the Fifth Circuit Court of Appeals or otherwise work to save the regulations.
However, that does not mean change may not still be just around the corner. On July 25, 2017, the DOL posted a "request for information" on the FLSA overtime exemptions. Not only did the DOL request information on changes to the salary test, it had a broader focus on the EAP "duties" tests themselves. For instance, the request for information looks at whether salary threshold should vary for different exemptions, different types of employers, or even different regions of the country. The DOL also seeks comments on whether the "duties" tests would need to be revised if a salary threshold is altogether eliminated. The deadline to submit comments is September 24, 2017, and the full text of the request for information can be found here.
If you have further questions, please contact any member of the Ahlers & Cooney Employment Law Group.
About Ahlers & Cooney's Client Alerts
Our Client Alerts are intended to provide occasional general comments on new developments in Federal and State law and regulations which we believe might be of interest to our clients. The Client Alerts should not be considered opinions of Ahlers & Cooney, P.C., and are not intended to provide legal advice as a substitute for seeking professional counsel. Readers should not under any circumstance act upon the information in this publication without seeking specific professional counsel. Ahlers & Cooney will be pleased to provide additional details regarding any article upon request. Additional copies of this Client Alert may be obtained by contacting any attorney in the Firm or by visiting the Firm's website at www.ahlerslaw.com. ©2017 Ahlers & Cooney, P.C. All Rights Reserved.
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