Labor Department Abandons Obama Administration Overtime Rules

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The U.S. Department of Labor (DOL) has decided not to challenge a November injunction blocking an overtime rule that would have doubled a worker’s exempt status. On June 30, the DOL informed the U.S. Court of Appeals for the 5th Circuit that it will instead pursue new rule-making that will set a lower salary level, as reported by the National Law Review.

The overtime rule, which had been set to go into effect December 1, 2016, had clarified which workers qualify for an exemption and declared that workers who make less than $47,476 per year, or $913 per week, are eligible for overtime if they work more than 40 hours per week, regardless of job title or description. The previous threshold had been $23,660 per year, or $455 per week.

In late November, a federal judge in the U.S. District Court for the Eastern District of Texas issued a ruling that barred the overtime rule from going into effect in all 50 states. The judge’s ruling stopped implementation of the new overtime regulations until the court reached a final decision on their legality. In his confirmation hearing, Labor Secretary Alexander Acosta noted that he would support a minimum annual salary in the low $30,000 range to account for inflation, NLR’s article noted.

The November federal injunction came as a result of a legal challenge from 21 states, led by Nevada, and the U.S. Chamber of Commerce. The legal effort sought to bar the overtime rule and to stop the automatic increases that were scheduled to occur every three years. In their challenge, a number retail trade groups, including the National Retail Federation, had argued, among other things, that the significant costs associated with implementing the overtime regulations would cause irreparable injury, as well as negatively affect the budgets of governmental programs and services.

In his November ruling, Judge Amos L. Mazzant III found that the DOL exceeded its authority when it increased the minimum salary level. “While this explicit delegation would give the Department significant leeway to establish the types of duties that might qualify an employee for the exemption, nothing … indicates that Congress intended [the DOL] to define and delimit with respect to a minimum salary level,” the ruling stated. “[The DOL]’s role is to carry out Congress’ intent. If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.”

When the DOL will attempt to institute a new salary threshold is unclear. The department stated it will not do so until the court affirms its right to do so, NLR reported.