Is Overtime Rule Dead? Texas Court says its ‘Invalid’.

On Aug. 31, U.S. District Judge Amos Mazzant granted summary judgment and ruled that the Obama administration’s overtime rule is “invalid,” putting a near end to this controversial proposal from the Obama-era administration that would have made over four million new workers eligible for overtime pay.

While an appeals court was busy debating the appropriateness of the injunction that initially halted the rule, a lower court judge reviewed the rule on its merits and found that the U.S. Department of Labor (DOL) did not have the authority to issue a rule that effectively eliminates the Fair Labor Standards Act’s duties tests. The court held that the rule’s salary level was too high, exceeded the DOL’s authority and, thus, was invalid. The high minimum salary threshold would basically eliminate the duties portion of the test to determine whether an employee is exempt or nonexempt — managers who should be exempt would not be because the salary level was set so high.

The ruling comes on the heels of President Donald Trump’s DOL already reviewing the overtime rule and considering a lower salary threshold.

The rule would have set a new federal salary threshold that must be met before an executive, professional or administrative employee can be exempt from overtime. States and business groups challenged the new salary threshold of $47,476 a year ($913 a week), which was more than double the existing federal salary test and also higher than California’s minimum salary test. This rule was set to go into effect in December of last year. However, legal challenges placed the rule on hold.

As for the judge questioning DOL’s authority, it won’t prevent the agency from now adopting a new threshold for the salary level. The court also denied a request filed by the Texas AFL-CIO to take over the defense of the rule.

There are still issues to sort out, like a lawsuit filed against the company Chipotle by its own workers that allege the injunction halting the overtime rules never applied to private employers. This decision can be appealed in court.

Although last year’s rule is now dead, the new administration has issued a Request for Information (RFI) to gather public input on the issue of overtime pay and how to define the executive, administrative and professional exemptions. The DOL is still accepting comments on its RFI through September 25, 2017. The RFI and instructions for submitting comments are available here.

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