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October 6, 2017

Obama’s Proposed Overtime Rule is Overruled

As you may recall, in 2016 the Department of Labor issued a new overtime rule under the Fair Labor Standards Act (FLSA). In nutshell, the new rule raised the salary threshold for employees exempt from overtime from $455/ week ($23,660.00) to $913/ week ($47,476.00). The new rule was scheduled to take effect on December 1, 2016; however, prior to the new rule taking effect a federal court in Texas issued a nationwide temporary injunction. While the ruling stopped the implementation of the new overtime rule, the delay was only temporary.

The Department of Labor appealed the temporary injunction and that appeal remained pending as President Trump took office in January. Indeed, the Trump administration did not dismiss the appeal and the future of the new overtime rule remained uncertain. However, on August 31, 2017, the federal court in Texas followed up its injunction with a ruling invalidating the new overtime rule permanently.

What if any action the Department of Labor will take in light of this ruling is unclear. Secretary of Labor Alexander Acosta has indicated that the Department will make another attempt to update the FLSA overtime rule. Indeed in July the Department issued a request for public comment on the subject. Despite the uncertainty regarding potential changes to federal overtime rules in the future, employers must remain vigilant in applying the current rules to determine whether an employee may be classified as overtime exempt. Employers should bear in mind that regardless of whether an employee meets the salary threshold of $455/ week they must also satisfy the duties test for overtime exemption. Indeed, an objective audit of the overtime classification of your workforce is an effective way to ensure compliance and to avoid costly investigations and enforcement actions.

Mr. Burkhouse is a Member with PK Law and is part of the firm’s Education, Labor and Employment Group. As part of Mr. Burkhouse’s employment law practice he counsels and represents employers regarding employment discrimination claims arising under Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act of 1967. Mr. Burkhouse also advises employers with regard to wage and hour issues, overtime, non-compete agreements, restrictive covenants, arbitration agreements, trade secrets, confidentiality agreements, and employee hiring and termination procedures. Mr. Burkhouse can be reached at (410) 740-3150 or dburkhouse@pklaw.com.