…At least until there is another overtime update.
Let’s review the history of these regulations. Prior to leaving office, President Obama’s Department of Labor significantly revised the salary requirements in order for certain classifications of employees to qualify for exemptions from overtime pay under the Fair Labor and Standards Act (“FLSA”). The DOL increased the salary minimum to qualify for an exemption from approximately $23,000 to approximately $47,000. Small employers and nonprofits scrambled to find a way to comply with the new regulations by the compliance deadline of December 1, 2016.
On November 22, 2016, the United States District Court for the Eastern District of Texas issued an injunction against the implementation of those rules. Small employers and nonprofits breathed a sigh of relief and tabled their new policies and employee classification changes.
Between November 22, 2016 and August 31, 2017, much happened in the Eastern District of Texas and the Fifth Circuit. Appeals were filed, extensions of time to file briefs were granted, and the Department of Labor, now led by President Donald Trump, revised its position on these rules. President Obama’s DOL had argued that the new regulations were a proper exercise of DOL’s rule making, and the President’s executive, powers. President Trump’s DOL argued that while the DOL and the President were within their rights to establish and revise a salary requirement, they would not defend this particular salary requirement.
On August 31, 2017, the Eastern District of Texas agreed, essentially, with the Trump DOL. The Court found that while the DOL is free to set and revise a salary requirement, this particular salary requirement was not enforceable.
The good news is that the salary requirement set by the Obama DOL was so high as to present a significant financial and operational burden for small employers and nonprofits, and this ruling eliminates that concern. However, the ruling leaves this DOL, or any DOL, free to revisit the salary requirement. In other words, we will all take this ride again sometime in the future.
Employers should continue to ensure compliance with the existing rules, and check back in with AMM for any future changes to the salary requirement.