The saga of a 2016 Obama administration federal rule, issued under the
Fair Labor Standards Act (FLSA), has taken a somewhat surprising turn. The 2016
rule, which was scheduled to be effective December 1, 2016, would have greatly
increased the weekly salary threshold for “white collar” overtime pay
exemptions. The federal Department of Labor (DOL) recently filed an appeal
in a Texas federal court lawsuit, challenging an August decision by the
district court judge that effectively invalidated the Obama administration
rule.
We have previously posted several times about the 2016 overtime rule and
the various twists and turns occurring after the Obama administration sought to
implement the rule, most recently discussing an earlier
appeal this summer by the Trump administration DOL.
At first blush, the August ruling by the federal district court
striking down the Obama administration’s salary overtime threshold rule would
appear to represent a “win” for the Trump administration given that the
administration has virtually abandoned the Obama-era rule. In that light, the new DOL appeal seems
surprising. But in striking down the Obama rule, the district court judge
broadly ruled that the DOL did not have the legal authority to set a salary
basis for overtime exemptions under the FLSA and instead requires Congressional
approval to do so. Through its appeal, the DOL will effectively be fighting for
preservation of broader powers on its part, which would allow it to draft and
implement a different overtime rule, with a lower salary threshold increase for
overtime exemptions (in addition to preserving broader rule-making authority in
other areas).
It is widely believed that the Trump DOL will eventually issue a rule
that does indeed increase the exemption salary level, but that the new minimum
threshold would be significantly lower than the $47,476 annual ($913 per week)
level contained in the 2016 rule. In
fact, the DOL intends to move forward, while its appeal is pending, with the
rule-making process and draft a new minimum salary threshold rule. The DOL will
ask the appellate court to stay the appeal while that rule-making process is
being undertaken.
Clarity is not likely to come on this
significant pay issue for several more months. Until then, the old minimum
salary threshold ($23,660 annual/$455 per week) remains in place.
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