A recent court ruling officially killed the controversial changes to the Obama-era DOL overtime rule. That means Finance can officially scrub the $47,476 salary threshold from their collective memories.
And, for the time-being, they can also forget about a flood of newly overtime-eligible employees.
In the recent ruling, a federal court just effectively said the DOL overstepped and set the salary threshold so high that it had effectively made employees’ duties, functions and tasks irrelevant.
And the agency didn’t actually have the authority under the FLSA to do that, the court added.
Finally, the court said the DOL’s OT provision that automatically escalated the salary threshold every three years was also unlawful.
How we got here
With all of the changes, revisions and drama surrounding the OT rule, it’s understandable if you don’t even remember how we got here in the first place. It all started last summer. As HR Morning reported, twenty-one states joined in a federal lawsuit that charges the Obama administration with overstepping its authority in rewriting the rules, which raise the overtime salary threshold from $23, 600 to $47,500 per year. The suit claims the change will place an undue burden on state budgets.
Then, after the states’ suit was filed, a similar suit was filed by the U.S. Chamber of Commerce and other business groups. Both lawsuits were filed in the U.S. District Court for the Eastern District of Texas.
After the lawsuits were filed, Judge Amos L. Mazzant, III, of the U.S. District Court for the Eastern District of Texas, issued a temporary injunction, which essentially halted the implementation of the DOL rule.
In issuing the injunction, Mazzant said the DOL had an uphill battle to climb in order to prove it had the statutory authority to issue such a rule.
Mazzant ruled the DOL exceeded its authority by raising the overtime salary limit so significantly (from $23,660 to $47,476). He said the DOL’s rule changes, essentially, made the exemption test a one-factor test based on salary alone. He said the changes basically eliminated the duties test, and he said the DOL must examine the duties of employees to determine who falls within the FLSA’s overtime exemption.
By issuing the injunction, Mazzant signaled that the lawsuit against the DOL had a significant chance of succeeding.
Of course, now the lawsuit has succeeded and the overtime rule change drama has been put to a rest — for the time being.
What happens now
With the OT rule employers had been prepping for effectively dead, can firms go back to operating as if the current 2004 version of the FLSA is the law of the land? For the time being they can.
However, the DOL is already requesting info to draft a new proposed rule. And while it’s safe to assume the DOL won’t try to double the minimum salary threshold, a more modest increase — $33,000 has been tossed around frequently — will likely be on the table.
In addition, the agency is taking a closer look at the duties tests — something that had generally been pushed to the back burner with the Obama-era OT changes.
Bottom-line: Don’t get too comfortable with the current OT exemptions; changes are likely coming soon.
(Note: This post first ran on our sister site, HR Morning.)