Last November, a Federal District Court Judge in Texas issued a nationwide injunction preventing changes to the overtime rules under the Fair Labor Standards Act (“FLSA”) from going into effect. Among other things, the new rules would have modified the so-called “salary level test,” such that an employee would need to make at least $913 per week in order to fall under the executive, administrative, and professional exemption (the “EAP exemption”). In the months that have passed since the injunction went into effect, there has been great uncertainty about the future of the new overtime rules. However, a brief filed by the Department of Labor on June 30 in its appeal to the U.S. Court of Appeals for the Fifth Circuit sheds some light on the Trump Administration’s plans for the overtime rules.
In the order issuing the injunction, the District Court Judge found that Congress intended for the classification of employees under the EAP exemption to be made based on job duties, and not based on a minimum salary threshold. As such, the injunction order calls into question the Department of Labor’s authority to set any salary level test at all, even though the test has been used for decades.
In its brief to the Fifth Circuit, the Department of Labor defends its authority to set a salary level by citing a 1966 Fifth Circuit case, which upheld the use of the salary level test as being rationally related to the determination of whether a worker is employed in a bona fide executive capacity. The Department also cited the business community’s support for a salary level test, as indicated in the more than 300,000 public comments received in advance of the issuance of the new rule. The Department has asked the Fifth Circuit to “lift the cloud created by the district court’s broad reasoning, which would call into question any salary-level test adopted by the Department.”
While defending its authority to establish a salary level test, the Department is backing away from the specific salary level set in the 2016 rule. The Department’s brief states that “[t]he Department has decided not to advocate for the specific salary level ($913 per week) set in the final rule at this time and intends to undertake further rulemaking to determine what the salary level should be.” The Department said that it does not intend to issue any notice of proposed rulemaking regarding the salary level test until after the Fifth Circuit litigation is concluded. However, the Department said that it will soon be publishing a request for information seeking public input on questions that it says will aid the Department in developing a new proposed rule.
So it appears that the uncertainty about the future of the overtime rule will continue for the foreseeable future, with employers and their counsel closely watching and waiting for the Fifth Circuit’s ruling and the Department’s requests for information.