Obama Administration Overtime Rule Struck Down
Last year, one of the most popular topics related to employment law focused on one thing: a proposed increase in the minimum salary required to classify employees as exempt from overtime under the Fair Labor Standards Act ( “FLSA”). The increase, to a minimum salary of $47,000, was slated to go into effect December 1, 2016. Many employees rejoiced at the news after receiving word that their salaries would increase, while many employers struggled to determine if they should increase salaries or switch employees to hourly workers subjected to the “standard” overtime rules.
But, right around Thanksgiving and just weeks before the overtime increase was to go into effect, its implementation was delayed by a preliminary injunction issued by a federal judge in Texas. Undoubtedly, this gave employers something to be thankful for, unfortunately at the expense of some of their employees. While the U.S. Department of Labor (“DOL”) previously appealed this decision, there it had not placed as much emphasis on fighting against the issuance of the preliminary injunction to the increase following the change in leadership as a result of the 2016 Presidential Elections.
Now, the same judge who initially granted a preliminary injunction in November 2016, has completely prohibited implementation of the overtime rule. In doing so, the judge reasoned that allowing the threshold to rise to $47,000 would result in management level workers losing their traditionally exempt status, force states to allocate large amounts of money to overtime pay, and cause an unknown number of job loss in the private sector. In short, that there was a possibility of a slippery slope if the increase were to be implemented.
Predictably, employer centered lobbyists and advocacy groups are largely celebrating the judge’s ruling, while employee centered groups point to the significant evidence accumulated by the DOL before it determined that an increase was warranted to improve the quality of life for nearly 4.2 million Americans.
Despite this news, the FLSA wage and overtime laws have been and will continue to be enforced. If you or someone you know has not been or believes that they are not being properly compensated for their wages or overtime, feel free to contact me and schedule a free initial consultation as soon as possible.