In November 2016, we reported that a federal judge in Texas issued a nationwide preliminary injunction against the U.S. Department of Labor’s (DOL) new overtime rule. Accordingly, the rule — which would have increased the minimum salary threshold for satisfying “white collar” exemptions to $47,476 per year — has never taken effect.
An August 31 ruling from that same federal judge has now put the DOL’s rule on hold indefinitely. Granting summary judgment to a coalition of states and businesses, the court found that the DOL overstepped its authority by setting the salary threshold too high.
According to the court, Congress intended for white collar exemptions to focus primarily on a worker’s duties. At $47,476 per year, the minimum salary threshold would exclude significant numbers of individuals who work in a bona fide executive, administrative or professional capacity. As such, the higher threshold effectively rendered the duties test meaningless in contravention of Congressional intent, according to the court.
Currently, the previous minimum salary threshold of $23,660 remains in place. And, to be sure, the DOL is free to propose a more modest increase in the minimum salary threshold. It remains to be seen what such an increase would be and whether it would stand up to subsequent legal challenge.
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