Wage and Hour Update: Texas Court Kills Obama-era Changes to Overtime Exemption

In what may be the final blow to the controversial Obama-era changes to the Fair Labor Standards Act (“FLSA”) exemption rules, United States District Court Judge Amos Mazzant recently entered summary judgment against the Department of Labor in State of Nevada v. United States Department of Labor. The decision strikes down the DOL’s Final Rule which was originally set to take effect in December of last year. The Final Rule would have, among other things, doubled the minimum salary required to be exempt from the FLSA and extended overtime eligibility to millions of workers.

On August 31, 2017, Judge Mazzant of the United States District Court for the Eastern District of Texas ruled that the Final Rule exceeded the DOL’s legal authority. According to Judge Mazzant, the Final Rule was contrary to Congress’ intent that FLSA exemptions be determined by job duties, and not by compensation levels. The decision does not come as much of a surprise. Late last November, Judge Mazzant issued a preliminary injunction placing the Final Rule on temporary hold only days before it was to go into effect.

In response to the recent decision, the Trump Justice Department has asked the Fifth Circuit Court of Appeals to dismiss its appeal of the preliminary injunction. Instead, the DOL will focus on its Request for Information (“RFI”) issued in July 2017. The RFI seeks fresh public comment on several specific questions, such as, appropriate salary levels, the effect of non-discretionary bonuses and incentive payments, and whether an automatic increase in salary thresholds would be appropriate. The new comment period ends on September 25, 2017.

For now, employers are not required to take any action. It appears, however, that we should expect to see some movement on new regulations in the near future. In the meantime, please contact Karl Ulrich at kulrich@ssdlaw.com or 937.222.2052 if you have questions or would like help in submitting a public comment on the Request for Information recently issued by the Department of Labor.

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