Federal Court Rules DOL’s 2016 Overtime Rule Is Invalid

By: Karen L. Piper

By now, you probably have heard that on August 31, 2017, the federal district court in Texas, which in November 2016 enjoined enforcement of the 2016 overtime rule, has decided that the rule’s minimum salary of $913 per week is invalid.

There are 3 factors to consider in determining whether an employee is exempt:

  • a salary basis test – an exempt employee must be paid a guaranteed minimum salary every week;
  • a minimum salary level test – an exempt employee must be paid at or above the designated minimum salary; and
  • a duties test – an exempt employee must perform designated executive, administrative or professional duties.

The court ruled the 2016 minimum salary level exceeded the Department of Labor’s (“DOL”) authority to make rules for determining which employees qualify for exemption from overtime pay.  The 2016 minimum salary of $913 per week was so high it “effectively eliminated” the duties test because a lot of employees who, despite performing exempt executive, administrative or professional duties, would no longer qualify for exemption.  The court concluded the DOL’s 2016 overtime rule is “invalid.”  This means the current rule with the minimum salary level test of $455 per week remains in effect indefinitely.

Also on August 31, 2017, the state plaintiffs filed an unopposed motion in the court of appeals to halt further proceedings in the DOL’s appeal of the lower court’s injunction “pending further discussions by the parties.”  In other words, the DOL and the businesses and states who filed the original lawsuits are talking and may be able to settle their differences, especially in light of the lower court’s ruling that the $913 per week minimum salary level is invalid and the DOL’s announced plan, which it has already commenced, to revisit the appropriate minimum salary level for exemption from overtime pay.

For further information on these proceedings or updates on the overtime rule consult experienced employment counsel such as the author.

This article was written by Karen L. Piper, who is Secretary of the Board of Detroit SHRM, a member of the Legal Affairs Committee, and a Member of Bodman PLC, which represents employers, only, in Workplace Law. Ms. Piper can be reached at Bodman’s Troy office at (248) 743-6025 or kpiper@bodmanlaw.com. For further information, go to: http://www.bodmanlaw.com/attorneys/karen-l-piper.

Detroit SHRM encourages members to share these articles with others, inside and outside their organization, as long as its name and logo, and the author’s information are included in the re-post of the article. September 2017.