Employers have been keeping a close eye on the Department of Labor as to what stance the Trump Administration would take on the revised overtime regulations originally planned to go into effect under the Obama Administration. In a June 30, 2017 filing with the Fifth Circuit Court of Appeals, the Department of Labor disclosed its intentions to re-write the Obama-era overtime regulations.
In 2016, under President Barack Obama, the Department of Labor introduced rules increasing the minimum salary level for employees to qualify for many of the white collar exemptions under the Fair Labor Standards Act. The rules, which were set to be implemented on December 1, 2016, would have raised the minimum weekly salary level for exempt white collar employees from $455 ($23,660 annually) to $921 ($47,892 annually). In addition, the rules called for automatic increases to the minimum level every three years.
Twenty one states and numerous business groups filed suit in the Eastern District of Texas, seeking a preliminary injunction prior to the implementation of these changes. The Court issued the injunction, finding that the DOL exceeded its authority by increasing the minimum salary level, as use of the new threshold level would supplant the duties test, which was specifically referenced to in the enabling legislation of the Fair Labor Standards Act. The DOL filed an appeal of the preliminary injunction in the Fifth Circuit Court of Appeals while President Obama was still in office, after which the Trump administration assumed responsibility over the appeal.
In the June 30 filing with the Court, the DOL defended the Obama administration’s actions in setting the new salary threshold; however, it made clear that it was not advocating for the specific salary level ($913 per week) set in the final rule. As a result, the DOL requested that the Fifth Circuit address only the threshold legal question of the Department’s statutory authority to set a salary level, without addressing the specific salary level. The DOL’s June 30 filing is the first official position taken by the Trump Administration on the issue. During his Senate confirmation hearing in May, new Labor Secretary Alexander Acosta acknowledged that the overtime rule was due for an update. The Fifth Circuit is scheduled to hear oral argument on the appeal during the week of October 2.
While the DOL has not provided any detail as to what salary level it views as appropriate, it recently published a Request for Information (RFI) in the Federal Register. The purpose of the RFI is to seek comments from the public regarding the minimum salary level threshold. Although the comment period ends on September 25, 2017, the process of analyzing the comments and preparing new regulations can be lengthy. We will keep you updated when the DOL takes further action with respect to the minimum salary level for exempt employees.