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Friday, July 7, 2017

DOL plows ahead on appeal of injunction against Obama “Overtime Rule”


In a move that reinforces the concept that the only thing predictable about the Trump Administration is its unpredictability, the U.S. Department of Labor filed a reply brief on June 30 asking the U.S. Court of Appeals for the Fifth Circuit to reverse a lower court’s 2016 ruling that enjoined the Obama Administration “overtime rule.”

Many had thought that a Trump-led DOL would have no interest in pursuing the appeal, which was already pending when the Trump Administration took over the reins at the DOL.

The DOL is arguing that the district court’s order was premised on an erroneous legal conclusion, and is asking the Fifth Circuit to reaffirm the Department’s statutory authority to establish a salary level test. However, the DOL asks that the court not address the validity of the specific salary level set by the rule ($913 per week), saying that the DOL intends to revisit the salary threshold through new rulemaking.

Background
The Obama DOL spent the better part of a couple of years engaged in formal rulemaking proceedings to modify the “white-collar exemptions” to the minimum wage and overtime provisions of the Fair Labor Standards Act – the so-called executive, administrative and professional exemptions. Those regulatory changes, which were finalized and set to take effect on December 1, 2016, would have, among other things, more than doubled the minimum weekly salary threshold necessary to qualify for the exemptions, raising it from the current $455 per week to $913 per week, and indexing it to automatically adjust every three years thereafter. Not surprisingly, most employers were shocked at the size of the increase.

On November 22, 2016, a federal judge in Texas preliminarily enjoined the DOL from enforcing the new regulations, only days before they were scheduled to take effect. The rationale for the court’s ruling was that the DOL did not have the legal authority to use salary level as a criterion for determining whether an employee qualifies for one of the white-collar exemptions. In other words, the DOL was limited to using a “duties test” to determine exempt status.

The DOL, in the waning months of the Obama Administration, sought an expedited appeal, but even an expedited appeal could not be completed before the Trump Administration took over. Lower court decision was wrong, Trump’s DOL argues in its appeal.

Common Sense Counsel: As if employers have not been on the wage & hour seesaw for long enough! Expect from Trump’s DOL a new notice of proposed rule-making on the “overtime rule” within the next few months. Look for a weekly salary number closer to $700 with no indexing. So don’t shred all of your wage analysis and employee announcements on changes just yet.

Tommy Eden is a partner working out of the Constangy, Brooks, Smith & Prophete, LLP offices in Opelika, AL and West Point, GA and can be contacted at teden@constangy.com or 334-246-2901 and blog at www.alabamaatwork.com. Part of the above analysis column appeared in the Constangy Newsletter authored by Tommy’s Washington D.C. partner Jim Coleman.