Federal Judge Blocks Overtime Rule
An employee’s exempt status is based on duties performed, not wages paid.
A U.S. District Judge issued a nationwide injunction stopping implementation of the Department of Labor’s rule on overtime pay for exempt employees. It was set to take effect on December 1.
According to the Washington Times, the judge ruled:
“Congress defined the … exemption with regard to duties, which does not include a minimum salary level,” Judge Mazzant wrote. “The Department’s role is to carry out Congress’s intent. If Congress intended the salary requirement to supplant the duties test, then Congress, and not the Department, should make that change.”
The full ruling is 20 pages, but this paragraph captures the essence of the argument:
To be exempt from overtime, the regulations require an employee to (1) have [executive, administrative or professional] duties; (2) be paid on a salary basis; and (3) meet a minimum salary level….The salary level was purposefully set low to “screen out the obviously nonexempt employees making an analysis of duties in such cases unnecessary.”…But this significant increase to the salary level creates essentially a de facto salary-only test.
In other words,
- Employees eligible for exemption from overtime requirements are supposed to be executive, administrative or professional (EAP) workers paid on a salary basis.
- Raising the minimum salary threshold through the executive rule-making process might lead to some EAP workers being classified as nonexempt solely on the basis of a salary test.
- A regulatory change that causes EAP duties to not be taken into account would need to be initiated through legislation by Congress, not rulemaking by an executive agency.
Despite this federal judge’s decision that blocks the rule from taking effect, the Department of Labor issued a statement saying its regulation remains legal: “We strongly disagree with the decision by the court.” The administration is “currently considering all of our legal options” for implementing the rule anyway.
For now, enforcement of the new overtime rules won’t take effect on 12/1.
While the Obama Administration and the Department of Labor will attempt to find other avenues to advance the regulatory changes; unless there is an appeal and immediate ruling, the rule changes will not go into effect on December 1. Furthermore, it is anticipated that Republicans will “wipe the rule away completely once President-elect Donald Trump takes office.”
If you have questions about overtime rules, the exempt status of your employees, we’d be happy to help. Please call 320-235-5937, or send an email to [email protected] or [email protected] to get started.
