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Expert: Court ruling effectively kills DOL overtime rule

Posted on Saturday, December 3, 2016 by Gary Hunt

By Gary Hunt, senior content editor

Scott Warrick says OSCPA members now have more urgent issues to work on than the suddenly unlikely Department of Labor overtime rule changes.

In a Thanksgiving week ruling that surprised many, an Obama-appointed federal district court judge in Texas imposed a preliminary injunction against rules scheduled to go into effect today – Dec. 1.

That decision, in conjunction with possible legislative opposition and an incoming president who has stated he opposes the regulation, effectively means it is dead, said Warrick, JD, MLHR, CEQC, an HR and legal consultant.

“This regulation has been shot twice, it's bleeding profusely and I don't think President Trump is going to save it,” Warrick said.

“The thing OSCPA members need to know is to work on things that matter,” he said. “Right now this doesn't matter. My overall message is, don't waste any more time with the minimum salary. Put everything about that on the back burner.”

OSCPA in October joined more than 400 U.S. organizations in signing a letter opposing the new regulations.

The rule, first proposed by the U.S. Department of Labor in 2015, would have revised overtime exemption requirements for "white collar" workers (executive, administrative and professional employees) under the Fair Labor Standards Act, the federal law governing minimum wage and overtime standards.

The FLSA requires that all workers are paid 150% of their hourly rate when they work more than 40 hours a week, though there are many exceptions. White collar workers earning as little as $23,600 can be held exempt from overtime pay. But the proposal would have more than doubled that threshold to $47,476 and included "a mechanism to automatically update the salary and compensation thresholds on an annual basis using either a fixed percentile of wages or the Consumer Price Index for Urban Consumers."

Warrick said he wasn’t surprised that a court put the rule on hold, but he did not foresee the judge’s rationale.

“What he said was that it's not within the DOL's authority to determine minimum salary,” Warrick said. “He said, ‘Congress never gave you the authority to do this in the first place.’”

Judge Amos Mazzant wrote that “Congress defined the … exemption with regard to duties, which does not include a minimum salary level. The department’s role is to carry out Congress’s intent. If Congress intended the salary requirement to supplant the duties test, then Congress, and not the department, should make that change.”

Warrick said the next step is to see what happens in the Texas case. If the judge’s preliminary decision stands in a final ruling, the DOL can appeal to the 5th Circuit Court of Appeals, but the Trump Administration seems likely to drop it.

With the holidays approaching, followed by Inauguration Day Jan. 20, it would appear there isn’t enough legal time left for the Obama Administration to do much to save the regulation.

“It's kind of like when you're playing football and running out the clock,” Warrick said.

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