Finance News & Insights

California’s answer to the OT delay: Will other states follow suit?

California is hoping to implement the DOL’s overtime changes with or without a federal mandate. And because employment law trends in the Golden State tend to catch on around the country, employers everywhere should pay attention to the fate of a new CA bill.
California lawmakers just proposed legislation to increase the salary threshold for employees who are exempt from OT to $47,476, the same threshold set by the DOL and blocked by a court injunction.

If passed, the bill (A.B. 1565) would increase the exempt salary threshold to the greater of $3,956 per month ($47,476 annualized) or double the minimum wage.

It would take effect on Jan. 1, 2018.

How we got here

Just before the Dec. 1 deadline for the new overtime rule, a Texas federal court judge handed down a preliminary injunction that essentially puts everything on hold. 

The Texas court case focused on two consolidated lawsuits. These suits, which were brought forward by 21 states and a number of business groups, challenged the agency’s FLSA salary threshold increase on the grounds that DOL overstepped its authority in rewriting the new regs.

And the judge agreed with this assessment. In his ruling, Judge Amos L. Mazzant said that by increasing the OT salary threshold so significantly, it essential made the overtime-exemption test a one-factor — i.e., salary — test. This steep increase basically eliminated the duties test so employers, the judge said, and the DOL must look into the duties of employees to determine who falls within the FLSA’s overtime exemption.

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