DOL Responds on Contested Overtime Rule

A series of court decisions prevented an overtime rule issued during the Obama administration last year from going into effect. This rule would have raised the salary threshold level for white-collar exemptions from $23,660 to $47,476 per year and increased this threshold automatically every three years, but some states blocked that rule by filing suit, and an injunction was granted late last year.

The Justice Department appealed the court’s decision on behalf of the Labor Department in December, and the Labor Department recently issued a reply brief, but that doesn’t mean the gridlock is over. “Employers should continue to ensure their job descriptions accurately meet the exemptions’ job duties test, and, depending on the 5th Circuit’s ruling, the Labor Department eventually may raise the salary level test,” says Kellen Scott of the law firm Chamberlain Hrdlicka.

Here’s what you need to know.

What Is the DOL’s Response?

The brief from the Justice Department asks the court to affirm the Labor Department’s ability to include a salary basis test as part of the requirements for the white-collar exemptions and to rule that the injunction be reversed, says Samantha Otero, an employment law attorney with McCandlish Holton Morris. “However, the Labor Department also asks the 5th Circuit not to address the validity of the specific salary level set by the 2016 final rule, because the Labor Department intends to revisit that amount through new rule-making.”

What Does It Mean?

The reply brief from the Labor Department could indicate that the Trump administration plans to raise the salary threshold requirement, but not as drastically as the rules called for, Scott says. “In its reply brief, the Labor Department abandons its defense of the particular salary level to which the enjoined regulations would have raised it,” Scott says. “Instead, the Labor Department requests the 5th Circuit only decide whether it enjoys the statutory authority to impose a salary level test for the white-collar exemptions.”

What’s Next?

At issue now is whether the issuance of the injunction was proper, says Elizabeth Livingston, senior associate at Griesing Law, and it will be heard by the 5th Circuit Court of Appeals. “This decision could be influenced by the idiosyncrasies of the judges on the three-person panel from the 5th Circuit that is selected to hear the case,” she says. “Additionally, it is unclear whether new Labor Department leadership appointed by President Trump will decide to move forward with the proposed overtime rule changes even if the Labor Department is successful in court proceedings.”

If the 5th Circuit does reverse the lower court’s injunction without ruling on the salary threshold, the question then becomes whether the final rule becomes effective immediately or retroactively, Otero says, and whether there is an alternative basis for the court to continue the injunction. ”That question remains unanswered at this point, but it is safe to assume the 5th Circuit will consider that potential uncertainty when drafting its opinion. Until that question is answered by the court, however, the injunction remains in force.”

In the meantime, the Labor Department is expected to solicit input regarding these overtime rules, Scott says. It announced it will publish a Request for Information asking for comment to help it in the rule-making process.

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