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DOL Brief in Overtime Rules Case Leaves New Uncertainty

By: Bill Pokorny

July 11, 2017

On June 30, the U.S. Department of Labor filed its long-awaited brief announcing the new administration’s position on the ongoing litigation over the FLSA overtime exemption rules published last May. As readers may recall, the new rules would have increased the minimum salary for exempt employees from $455 per week to $913 per week. The rules were blocked by a preliminary injunction from a U.S. District Court just days before they were to take effect last November. The Department of Labor appealed that injunction ruling to the 5th Circuit Court of Appeals shortly before President Obama left office. That appeal has been on hold while the new administration reviewed its position on the regulations and the lawsuit.

In its new filing, the DOL tries to walk a fine line. On the one hand, the agency argues that the District Court’s ruling went too far by suggesting that the DOL could not include any minimum salary requirement in its test for exempt status. The DOL further argues that the state plaintiffs’ claims that the DOL regulations violated the 10th Amendment should be rejected. However, the DOL ask that the Court of Appeals not address the “validity of the specific salary level set by the 2016 final rule,” stating that it has “decided not to advocate” for that level, and that it instead “intends to undertake further rulemaking to determine what the salary level should be.”

While the DOL under Secretary Acosta seems to be taking a more business-friendly approach to the salary level issue than that of the prior administration, this latest move still leaves employers nationwide in an uncertain situation. If the Court of Appeals agrees with the DOL and reverses the District Court’s order imposing the preliminary injunction, the result might be that the 2016 final rules will take effect immediately. Further, the courts may hold that if the injunction is lifted, the rules take effect retroactive to their original effective date of December 1, 2016.  Clearly this outcome would be a serious concern for the thousands of employers nationwide who held off making changes in response to the new rules in light of the injunction. To be sure, this is a worst-case scenario that might be avoided depending on how the courts rule. For example, if the Fifth Circuit agrees with the DOL’s position, the District Court might issue a new injunction focusing on the specific $913 per week salary level used in the 2016 rules, rather than the broader reasoning used in its initial ruling. The likely protests of employers nationwide may also be enough to prompt Congressional intervention.

In the meantime however, employers remain where they have been since November – in limbo, waiting for a resolution.

By: Bill Pokorny

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