Key Issues

Texas Court Strikes Down Overtime Rule (Again)

SEPTEMBER 1, 2017 (WASHINGTON INSIDER ALERT) - Yesterday, Judge Mazzant of the United States District Court for the Eastern District of Texas struck down the U.S. Department of Labor (DOL)'s May 2016 regulation which would have doubled the minimum salary employees must received to qualify for the “white collar” exemptions to federal overtime pay requirements. Mazzant temporarily enjoined the regulation on November 22, 2016, which prevented it from going into effect as planned on December 1, 2016.

In both yesterday’s ruling and the temporary injunction, Mazzant found that DOL exceeded its authority by setting the minimum salary level so high that millions of employees would suddenly become ineligible for the white collar exemption regardless of whether their duties met the exemption criteria. The court found that nothing in the Fair Labor Standards Act allowed the Department to “make salary rather than an employee’s duties determinative of whether a 'bona fide executive, administrative or professional capacity’ employee should be exempt from overtime pay.”

Yesterday’s decision also brought additional clarity on the extent to which DOL may rely on a minimum salary threshold in the future. Mazzant specifically stated that while DOL could rely on a salary level, “a permissible salary level would need to be set somewhere near the lower end of the range of prevailing salaries for these employees and used to simply screen out the obviously nonexempt employees, making an analysis of duties in such cases unnecessary.” He suggested that adjusting the salary threshold DOL set in 2004 for inflation would be permissible.

With this additional clarity, DOL should be able to move forward with a proposed revision to the May 2016 regulation after it concludes gathering data through its recent Request for Information (RFI). The Department claimed in court pleadings that it filed in its appeal to the injunction relief that it was reluctant to issue a proposed revision to the regulation while “its authority to establish a salary level test” was being litigated.

In place of a proposed revision, DOL issued on July 26 an RFI, which invites the public to comment on a multitude of questions including “whether the standard salary level set in that rule effectively identifies employees who may be exempt, whether a different salary level would more appropriately identify such employees, the basis for setting a different salary level, and why a different salary level would be more appropriate or effective.” RFI comments are due on September 25.

CUPA-HR is in the process of gathering data to respond to the RFI and plans to submit substantive comments on behalf of higher education with the help of our membership. We will continue to monitor this issue carefully and provide you with the latest information as it becomes available.