Department of Labor’s Overtime Rule Delayed

Thursday, December 1, 2016

On November 22, 2016, a Texas U.S. District Court judge issued a nationwide temporary injunction blocking the U.S. Department of Labor (DOL) from implementing new overtime pay rules scheduled to take effect December 1, 2016. Twenty-one states joined business groups filing suit in the eastern district of Texas to stop the DOL from implementing the rules, which they say would substantially increase employment costs.

On May 18, 2016, the DOL issued the final version of its overtime pay rule, which would extend “exempt” overtime pay regulations from $23,660 per year to $50,440 per year, a salary threshold that would be updated every year in the Federal Register. The rule would nearly double the threshold for exemption from overtime pay for professional employees, also referred to as “white collar” employees, from $23,660 ($455 per week) to $47,476 ($913 per week). The overtime eligibility rate would also be adjusted every three years. As a result, more state and local government employees who are currently classified as exempt could be eligible for overtime pay, extending indefinitely.

The Texas court issued the temporary injunction because of the DOL’s attempt to increase salaries without consideration of an employee's duties. The litigation and potential appeals process could drag into 2017, when president-elect Donald Trump could take action to rescind the overtime pay rule or instruct the DOL not to defend it.
This rule is one of several that the incoming Trump administration has said it will roll back. In addition, the 114th Congress has already taken action to delay implementation of the overtime pay rule.

On March 13, 2014, President Obama signed a presidential memorandum directing the DOL to modernize and streamline existing overtime regulations. The memorandum directs the DOL to propose specific regulations defining which workers are protected by the Fair Labor Standards Act governing “white collar” exemption from overtime pay for executive, administrative, and professional employees.