New Developments on FLSA Overtime Exemptions

September 5, 2017

There have been a number of developments regarding the May 2016 FLSA rule change involving employees exempt from overtime.  The most recent is an August 31, 2017 ruling by Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas granting summary judgment to more than 55 business groups which challenged the new rule.  As a result, the District Court Judge held the 2016 regulations invalid since the Department of Labor “does not have the authority to use a salary-level test that will effectively eliminate the duties test”. 

It is important to acknowledge that Judge Mazzant’s injunction, issued prior to the December 1, 2016 effective date of the new rule, is pending in the Fifth Circuit Court of Appeals. Reportedly, oral argument was scheduled for October 3, 2017.

It might be helpful to back up a step to review the history of the FLSA regulations.  As you recall, the minimum salary requirements for those exempt from overtime was increased from $23,660 annually to $47,476 per year with an automatic escalator built in every three years.  Just prior to the December 1, 2016 effective date for the new rule, Judge Mazzant issued a nationwide injunction stopping the rule from going into effect.  This decision was appealed to the Fifth Circuit Court of Appeals.  In a brief recently filed by the Department of Justice it appears the Department of Labor intends to revisit the $47,476 salary limit via new rule-making.  Meanwhile, the 2004 regulations remain in place with the minimum salary of $23,660.

We will see if the Department of Justice appeals Judge Mazzant’s August 31 ruling.  We await future legal developments on this vital issue for employers.