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Federal court finally nixes Obama OT rules

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in Employment Law,Human Resources

After much litigation and confusion, employers finally have an answer to whether they will have to comply with the overtime regulations the Obama administration intended to go into effect in December 2016. They don’t.

The regulations are now effectively dead after a federal court in Texas ruled they exceeded the Department of Labor’s authority under the Fair Labor Standards Act.

Recent case: The Obama administration overtime regulations essentially doubled the minimum salary required to classify many employees as exempt under the FLSA. The regs also set up an automatic system for increasing those salaries going forward.

But a group of state governments and a coalition of employers sued to prevent the rules from going into effect. The court issued an injunction and has now granted summary judgment for the states and employers.

The court concluded, “The Final Rule more than doubles the Department’s previous minimum salary level, increasing it from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). This 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.”

That, the court said, means that the DOL went beyond the authority it had been granted in the FLSA to determine exactly who should be classified as exempt. (Nevada et al. v. DOL et al., ED TX, 2017)

Final note: The Trump DOL has not ruled out raising the salary level from the current $455 per week and has requested input from interested parties on other potential changes to the overtime regulations.

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