The fate of the new federal overtime rule took an interesting turn last week.
On June 30th, the U.S. Department of Labor filed a brief with the Fifth Circuit Court of Appeals (New Orleans) saying that it wants salary level to count in deciding who is eligible for overtime pay, but that it does not want to set the maximum pay a worker can get and still qualify. In other words, Labor will not defend the Obama-era salary test for certain exemptions from overtime pay requirements under the Fair Labor Standards Act (FLSA). Rather, Labor is asking that the court affirm its authority to use some minimum salary but not reinstate the specific salary set by the previous administration, which nearly doubled the salary threshold to $913/week, or $47,476/year. 21 states filed a lawsuit in response to that proposal.
Remember that, in late November 2016, just days before the new regulations were to take effect, a U.S. District judge ruled that the Department of Labor exceeded its authority by focusing on salaries. This put the entire overtime matter on hold.
So what exactly does this all mean? Labor defending its authority to set a salary threshold in determining who qualifies for overtime, but not actually defending the rule itself, is a pretty clear indication that it’s trying to distance itself from Obama’s salary threshold level but still maintain some control over overtime regulations. New Labor Secretary Alex Acosta has indicated he’d consider raising the maximum salary level from nearly $24,000 to slightly more than $30,000 to keep up with inflation, still providing time-and-a-half pay for hours exceeding 40/week to workers making less than the threshold, but at a level more sustainable for businesses (the Obama administration salary level would have made an estimated 4 million more Americans eligible for overtime). Still, I think a key issue here is the November 2016 ruling by the U.S. District Court judge, which very much called into question whether the Department of Labor has any authority at all to use a salary level to establish overtime policy. If that judge’s finding is upheld, that Labor overstepped its bounds, Labor will most likely have to set overtime regulations based on duties that employees perform, exempting “executive” or “professional” workers based on the jobs they carry out and not how much money they make. We’ll just have to watch.
The Department of Labor is seeking public comments on a possible new salary threshold. I encourage you to participate in that discussion, and to keep your eyes on changing employment law. Admittedly, it’s not the most exciting thing you’ll read all day, but staying current will help you avoid financial liability.
