Despite the fact that the U.S. Department of Labor’s new overtime regulations were set to go into effect on December 1st, the validity of the regulations remains unsettled. We previously reported that on November 22nd, Judge Amos Mazzant of the United States District Court for the Eastern District of Texas granted a nationwide injunction precluding the Department of Labor from implementing and enforcing the regulations on November 22nd in Nevada v. U.S. Department of Labor. On December 1st, the very same day that the regulations were supposed to go into effect, the Department of Labor announced that it would appeal Judge Mazant’s ruling to the Fifth Circuit Court of Appeals. The Department of Labor has also requested an expedited hearing and decision on the appeal, noting that the delay could deny added overtime pay for millions of workers. The Department of Labor maintains that the new minimum salary is reasonable and that Judge Mazant incorrectly interpreted the Fair Labor Standards Act to prevent the Department of Labor from using a salary-level test to determine which workers qualify for overtime exemptions. Conversely, Nevada, Texas, and 19 other plaintiff states argue that the salary thresholds do not reflect the character of work that employees perform and that the regulations will result in significant costs for public and private employers.
The regulations, commonly referred to as “the Final Rule,” were approved by the Obama administration’s Department of Labor in May of this year and were set to raise the minimum salary threshold for the FLSA’s white-collar exemptions from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). Many employers nationwide have understandably expressed concern over the risks and costs required for compliance with the Final Rule, which more than doubles the salary amount required for employees to qualify for the administrative, professional, and executive exemptions. Nonetheless, the future of the regulations, and employees’ compensation, will likely remain in doubt until the Fifth Circuit rules on the Department of Labor’s appeal.
President-Elect Trump’s recent victory in the 2016 presidential race further complicates the future of the overtime regulations. President-Elect Trump has not indicated whether or not he would actively work to repeal the overtime regulations; Trump’s only public remarks on the subject were vague indications during the presidential campaign that he would like to see implementation of the regulations delayed or exemptions granted for small businesses. However, Congressional Republicans, who have retained control of both houses, unabashedly oppose Obama’s overtime regulations and could actively work to repeal them once Trump is in the White House and Congress is once again in session.
If the overtime regulations are ultimately defeated, then employers who have already implemented them into their compensation schemes may have overcompensated their employees and incurred the additional expenses associated with the transition. The future of the new DOL overtime regulations remains uncertain, but at this stage it is clear that the DOL unsurprisingly is not planning to go down without a fight.