Yesterday, Judge Amos Mazzant, a federal judge based in Texas, issued an order invalidating the Obama-era overtime rule that would have made more than 4 million additional workers eligible to earn overtime.
By way of background, in 2014, President Obama directed the Department of Labor to modernize and streamline the existing overtime regulations for executive, administrative and professional employees. Following an extensive rulemaking and comment period (during which the DOL received more than 293,000 comments), a new final rule was issued on May 23, 2016. The new overtime rule, which was slated to go into effect on December 1, 2016, would have raised the salary-level test for executive, administrative, and professional workers from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). Several states and businesses filed suit, challenging the new overtime rule. In November, Judge Mazzant issued a nationwide injunction preventing the new overtime rule from going into effect while he considered the challenges to the rule.
In yesterday’s order, Judge Mazzant found that the DOL exceeded its authority when it more than doubled the minimum amount under the salary-level test. The Fair Labor Standards Act provides that “any employee employed in a bona fide executive, administrative, or professional capacity … as such terms are defined and delimited from time to time by regulations of the Secretary [of Labor]” shall be exempt from minimum wage and overtime requirements. The judge agreed that Congress empowered the DOL to define what constitutes “a bona fide executive, administrative, or professional capacity,” but he found that Congress intended for that determination to be made based on job duties, and not based on salary alone. Judge Mazzant found that the DOL was not prohibited from establishing a salary-level test, but he ruled that exempt status cannot be based on salary-level only. The judge found that the salary-level test in the current overtime rule (circa 2004) is low enough that it serves as a floor to screen out obviously non-exempt workers, making an analysis of duties in such cases unnecessary. The salary-level test in the new overtime rule, however, would render entire categories of previously exempt workers nonexempt, regardless of what their job duties are. This, Judge Mazzant ruled, exceeded the DOL’s authority, and he struck down the new rule.
The future of the overtime rule has been uncertain ever since Judge Mazzant issued his injunction back in November. As a candidate, Donald Trump indicated that he was open to making changes to the new rule. In July, the Trump-administration DOL defended its authority to set a salary-level test, but backed away from the $913 per week figure set by the Obama-era DOL, and instead issued a new Request for Information with the intention of further revising the rule. The comment period for the Request for Information is open through September 25, 2017.
Judge Mazzant’s order does not have any immediate effect for employers. The 2004 overtime rule continues to remain in effect. We’ll all be eagerly awaiting further developments from the DOL on additional rulemaking on overtime.