Quote of the Day
“Nothing in Section 213(a)(1) allows the Department [of Labor] to make salary rather than an employee's duties determinative of whether a “bona fide executive, administrative, or professional capacity” employee should be exempt from overtime pay” – U.S. District Court Judge Amos Mazzant, challenging the Department of Labor’s 2016 overtime rule.
The Story
On October 30, 2017, the Department of Justice (“DOJ”), acting on behalf of the Department of Labor (“DOL”), filed an appeal with the Fifth Circuit challenging a Texas district court’s ruling which invalidated the Overtime Final Rule.
Brief History
On March 23, 2016, President Obama directed the Secretary of Labor to ““modernize and streamline the existing overtime regulations for executive, administrative, and professional employees.” In response to that directive, on May 23, 2016, the DOL published a final rule which required employers pay those employees a minimum of $913 per week, as compared to the former rule requiring a minimum of $455 per week. In other words, this increases the minimum annual salary from $23,660 to $47,476. The rule also provides for an automatic increase in the minimum salary level every three years, the first increase set to occur on January 1, 2020.
Decision Being Appealed
On August 31, 2017, U.S. District Court Judge Amos Mazzant held that the new salary level established by the DOL in the Final Rule conflicts with the Fair Labor Standards Act and effectively eliminates the “duties test” formerly used to determine whether an employee performs exempt duties, thereby exempting that employee from overtime pay. The decision held that the DOL acted outside its authority in its establishment of the new minimum salary level. The court stated,
[t]his significant increase would essentially make an employee's duties, functions, or tasks irrelevant if the employee's salary falls below the new minimum salary level. As a result, entire categories of previously exempt employees who perform “bona fide executive, administrative, or professional capacity” duties would now qualify for the EAP exemption based on salary alone.
In other words, according to Judge Amos Mazzant, the Final Rule puts more emphasis on salary than it should, changing the test for determining which employees are exempt and ignoring Congress’s unambiguous intent.
What’s Next?
According to the DOJ, once the appeal is on the docket, it “will file a motion with the Fifth Circuit to hold the appeal in abeyance while the Department of Labor undertakes further rulemaking to determine what the salary level should be.” That is, the DOJ will ask the Fifth Circuit wait on the DOL while it works out the kinks in the minimum salary level. The DOL’s primary objective is to assert its authority in the establishment of overtime regulations.
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