U.S. Department of Labor Issues Response to Court Injunction on Implementation of Overtime Final Rule

Yesterday the U.S. Department of Labor issued a response to the recent federal court decision that blocked the Department of Labor from implementing the Overtime Final Rule on December 1, 2016.  We wrote about the decision earlier this week in Wage/Hour Alert: Court Issus Nationwide Block of Overtime Exemption Regulations.  According to the Department of Labor’s statement on its website:

On November 22, 2016, U.S. District Court Judge Amos Mazzant granted an Emergency Motion for Preliminary Injunction and thereby enjoined the Department of Labor from implementing and enforcing the Overtime Final Rule on December 1, 2016.  The case was heard in the United States District Court, Eastern District of Texas, Sherman Division (State of Nevada ET AL v. United States Department of Labor ET AL No: 4:16-CV-00731). The rule updated the standard salary level and provided a method to keep the salary level current to better effectuate Congress’s intent to exempt bona fide white collar workers from overtime protections.

Since 1940, the Department’s regulations have generally required each of three tests to be met for the FLSA’s executive, administrative, and professional (EAP) exemption to apply: (1) the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (“salary basis test”); (2) the amount of salary paid must meet a minimum specified amount (“salary level test”); and (3) the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (“duties test”).  The Department has always recognized that the salary level test works in tandem with the duties tests to identify bona fide EAP employees.  The Department has updated the salary level requirements seven times since 1938.

The Department strongly disagrees with the decision by the court, which has the effect of delaying a fair day’s pay for a long day’s work for millions of hardworking Americans.  The Department’s Overtime Final Rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule.  We are currently considering all of our legal options.

Whatever the Department of Labor decides to do now, it could end up changing its position under the Trump administration.  For example, if the Department of Labor decided to appeal the ruling, the Trump administration could require that the appeal be abandoned, which would result in the abandonment of the Overtime Final Rule.  We will continue to monitor developments in this area and inform our clients and friends.