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2016 OVERTIME RULE ON PERMANENT HOLD AS DOL DEVELOPS NEW RULE

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On October 30, 2017, the Department of Labor filed a new notice of appeal in the suit that challenged the Obama administration’s overtime regulations. These regulations, which were intended to become effective on December 1, 2016, more than doubled the minimum salary level required to qualify for a white-collar exemption to $913 per week ($47,476 annually).

The new rule never went into effect, however, due to a lawsuit filed by states and business groups. In November of 2016, the United States District Court for the Eastern District of Texas issued a nationwide preliminary injunction blocking implementation of the new rule.  Later, on August 31, 2017, the District Court granted summary judgment to the plaintiffs and invalidated the 2016 overtime regulations.

The DOL previously filed an appeal to the District Court’s order granting the preliminary injunction. When the District Court issued final judgment for the plaintiffs on August 31st, the DOL’s appeal was rendered moot and voluntarily dismissed.

The DOL’s latest appeal is to the District Court’s August 31st final judgment.  In a significant turn of events, on November 3rd, the DOL filed an unopposed motion in the United States Court of Appeals for the Fifth Circuit to hold its appeal in abeyance “pending the outcome of new rulemaking.”  The DOL supported its request for abeyance by explaining that it was in the process of reviewing over 214,000 comments to the Request for Information that it had published to solicit public input on the salary level test and related issues.  The DOL intends to use these comments to develop a new proposal to revise the overtime regulations.

Although it is not clear what the new salary threshold will be, Department of Labor Secretary Alexander Acosta has indicated that the new overtime regulations will set the new salary level somewhere between the existing threshold and the threshold set by the 2016 proposed rule. Potentially hindering these efforts is the District Court’s rulings that questioned whether the DOL even had the authority to use salary as a foundation for defining the white-collar exemption.

It seems likely that the reason for the DOL’s latest appeal is to clarify and to secure its authority to use a salary test for the white-collar overtime exemption. By filing this appeal, the DOL is taking at least some risk that the Court of Appeals will overturn the District Court’s decision and uphold the Obama overtime rule.  In the meantime, employers must follow the exempt salary level of $455 per week ($23,660 annually), which has been in effect since 2004.

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