A Texas Court Struck Down the 2016 Overtime Rules. Again. Now What? A Texas Court Struck Down the 2016 Overtime Rules. Again. Now What?

A Texas Court Struck Down the 2016 Overtime Rules. Again. Now What?

On Aug. 31, 2017, the same Texas Court that previously enjoined the commencement of the Obama Administration’s changes to the overtime rules again struck down the 2016 regulations; this time through a final judgment on the merits. The Court ruled the U.S. Department of Labor’s (“DOL’s”) use of a salary test effectively supplanted the duties test and thus violated the DOL’s authority to promulgate rules interpreting the Fair Labor Standards Act.
 
U.S. District Judge Amos Mazzant granted summary judgment to a collection of more than 50 business groups who joined together to oppose the DOL’s 2016 regulations. The proposed regulations only changed the salary thresholds and did not modify the test used to determine the duties, functions or tasks. Proposed changes to the salary threshold were significant, however, raising the minimum salary threshold for the “white collar exemption” to just over $47,000, with planned increases every three years, and increasing overtime eligibility for highly compensated employees from $100,000 to approximately $134,000. 
 
The Texas Court ruled the DOL exceeded its authority by crafting a final rule that prioritized salary over an employee’s job duties. By doing so, the DOL failed to carry out Congress’ unambiguous intent. Judge Mazzant did not rule out a lower salary test that would “screen out” lower paid workers who typically do not perform executive, administrative or professional duties. In fact, the Court’s opinion expressed it was “not making any assessments regarding the general lawfulness of the salary level test” or “the DOL’s authority to implement such a test.”    
 
On Sept. 5, 2017, the DOL filed a short, unopposed motion to withdraw its pending appeal of the earlier injunction. The DOL’s action hints it will not appeal Judge Mazzant’s summary judgment ruling, which will remain the final word on the 2016 overtime rules.
 
So, what is next? The DOL indicated it will propose new rules and has already requested public comment on the salary requirements. Secretary of Labor Acosta previously testified he supports changes to the salary threshold but at a much lower threshold than the 2016 rules, and the DOL, in briefs filed in the appellate action, noted the current administration supports lower salary increases than the 2016 rules. 
 
Even so, adhering to the required rule-making steps will take months. In the meantime, the 2004 salary threshold of $23,660 annually is still in effect, and there have been no changes to the duties test.     
 
Going forward, employers should still review and conform to the controlling state laws. In addition, there are plenty of traps to employers who may desire to roll-back previously implemented 2016 increases. In these cases, please contact Catherine L. Strauss or any member of Ice Miller’s Labor, Employment and Immigration Group for assistance.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances. 
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