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New Administration Abandons Appeal of Obama Era Increases, Leaving Status Quo for Now

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On September 5, 2017, the U.S. Department of Justice (DOJ) dropped its appeal in support of the U.S. Department of Labor’s (DOL) intended increases to the Fair Labor Standards Act’s (FLSA) salary-basis test for the white-collar overtime exemptions. The appeal stemmed from a preliminary injunction issued by a federal district court in Texas, which halted the nationwide implementation of the DOL’s 2016 amendments to the FLSA. The DOJ’s request to dismiss the appeal comes just days after the same federal judge permanently struck down those amendments.

Promulgated under the Obama administration, these amendments sought to expand overtime protections to an estimated 4.2 million additional white collar workers by increasing the salary threshold to $47,476. However, on August 31, 2017, a Texas federal judge found the DOL had overstepped its authority by focusing too heavily on the salary of individuals, instead of their job duties. The Texas court reasoned that by more than doubling the salary threshold, the DOL’s changes effectively eliminated the job duties test.

What Does this Mean for Employers?

The withdrawal of the appeal means that, at least for now, the test for white-collar, overtime-exempt employees remains the same:

  • Employees must be paid on a salary basis at least $455 per week ($23,660 a year); and
  • Employees must meet the duties test for one of several exemptions, such as the executive exemption, the administrative exemption, or the professional exemption.

Don’t Be Complacent; Changes May Be Coming

Despite the recent events in Texas, changes may be coming as the DOL is taking yet another look at the current overtime regulations. The DOL has asked for comments regarding both the salary portion of the test, as well as the job duties portion.

While employers can continue to rely on the existing test for the white-collar exemptions for now, employers must be prepared for possible significant change in the near future. Honigman will continue to monitor these developments and alert employers to any updates to the DOL’s regulations. If you have any questions about how this may impact your business, please contact one of Honigman’s Labor and Employment attorneys.

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