Court Shoots Down Salary Level Test in DOL Overtime Rule

By SHLC on September 1, 2017 in Legal Update
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The U.S. Department of Labor’s (“DOL”) proposed overtime exemption rule suffered another blow today. A Texas federal court granted summary judgment in favor of business groups and States who challenged the new regulations last year. The proposed rule was blocked by a preliminary injunction issued in November 2016, as reported here: http://suttonhague.com/new-overtime-rules-blocked/.

The Court found that DOL exceeded its authority under the Fair Labor Standards Act by more than doubling the salary level for the so-called “white collar” exemptions for bona fide executive, administrative, and professional employees. The substantial increase in salary level would transform previously exempt employees into non-exempt employees with no change in the duties they perform. This went beyond Congress’ intent when it authorized DOL to develop regulations setting the limits of the exemptions. According to the Court, DOL “does  not  have  the  authority  to  use  a  salary-level test  that  will  effectively  eliminate  the  duties  test.”

An appeal of the preliminary injunction is pending before the Fifth Circuit Court of Appeals. The District Court’s reasoning for the preliminary injunction decision is largely the same as the reasoning supporting the recent summary judgment decision. The Fifth Circuit Court of Appeals has yet to weigh in on the merits of the matter.

The Trump Administration previously stated that it would reconsider the Obama-era rule and possibly a different salary level. In June, DOL issued a Request for Information as part of the rulemaking process.

The case is State of Nevada, et al. v. United States Department of Labor, et al. (Eastern District of Texas, Aug. 31, 2017) Case No. 4:16-cv-00731.