U.S. Department of Labor Defends Authority To Implement a Salary-Level Test for Overtime Exceptions But Signals New Rulemaking to Replace Overtime Regulations Issued During Obama Administration

July 7, 2017
The Fair Labor Standards Act requires employers to pay covered employees time and a half for all hours worked in excess of 40 in any work week. The Act exempts “white collar” employees from overtime eligibility. Under U.S. Department of Labor regulations, employees must satisfy a salary-basis test to qualify for the “white collar” exemptions. In May 2016, the Department issued new regulations, which were scheduled to take effect on December 1, 2016, substantially raising the salary threshold from $455 per week ($23,660 per year) to $913 per week ($47,476 per year).

Various States and business groups sued to block the Department’s overtime regulations and, on November 22, 2016, Judge Amos Mazzant in the Eastern District of Texas temporarily enjoined the regulations on a nationwide basis. Nevada v. U.S. Dep’t of Labor, 218 F. Supp. 3d 520 (E.D. Tex. 2016). Judge Mazzant held that “the Department exceed[ed] its delegated authority and ignore[d] Congress’s intent by raising the minimum salary level such that it supplants the duties test.” Id. at 530. The Department appealed to the Fifth Circuit but, after the change in Administration, the Trump Administration requested (and received) three briefing extensions.

On June 30, 2017, the Department filed its reply brief before the Fifth Circuit. The Department argued that the district court erred in its conclusion that the Act “does not grant the Department the authority to utilize a salary-level test,” because Fifth Circuit precedent expressly upheld the Department’s minimum-salary requirement. But, the Department “decided not to advocate for the specific salary level ($913 per week) set in the final rule at this time and intends to undertake further rulemaking to determine what the salary level should be.” The Department further stated that it had begun the process of requesting information to implement new overtime regulations through notice-and-comment rulemaking. In fact, three days prior to filing its brief, the Department of Labor sent a Request for Information related to the overtime rule to the Office of Management and Budget for review. News Release, Dep’t of Labor, US Labor Department Sends Request for Information on Overtime Rule to Office of Management and Budget (June 27, 2017), https://www.dol.gov/newsroom/releases/opa/opa20170627. Now that the briefing is concluded, oral argument will be scheduled for the first available date.

Wages and Overtime