Obama Overtime Rule Set Aside by Texas Court

The same Texas federal district court which temporarily enjoined the Department of Labor’s doubling of the salary levels test on the eve of its implementation in 2016 has determined that the Department of Labor lacked the authority to set the salary thresholds so high.  The rule would have doubled the salary level necessary for exempt status from $23,000 annually to roughly $47,000 annually, throwing an estimated 4 million formerly exempt workers into non-exempt status and therefore eligible for overtime.  The administrative rule change which was to take effect on December 1, 2016, was challenged by employer organizations which argued that the salary level was too high thereby undermining Congress’s authority to exclude individuals who perform bona fide executive, administrative or professional duties.  The Court agreed and determined that the DOL lacked the authority to set the salary threshold so high that it would eliminate or, at minimum, dilute application of the duties test in determining exempt status.

On a related note, on September 5, 2017, the Justice Department asked the U.S. Court of Appeals for the Fifth Circuit to dismiss its appeal which sought to affirm the DOL’s authority to take salary into account for overtime purposes.