Overtime rules are back, and labor department wants right to set salary limits

Many of employers may remember that in November of last year there was some litigation surrounding the new overtime rules that were scheduled to take effect on Dec. 1, 2016. But on Nov. 22, a judge in the United States District Court for the Eastern District of Texas entered an injunction temporarily stopping the U.S. Department of Labor from implementing its new final rule regarding overtime.

To refresh the recollection of any employers who may have forgotten, the main point of the new overtime rules was to raise the salary threshold of exempt employees to $913 per week or $47,476 per year. The salary basis was previously $455 per week or $23,660 per year. Basically, employees making below the new salary threshold would no longer qualify for the professional, administrative or executive exemptions from overtime. The final rule also established a mechanism for automatically updating the salary threshold every three years.

While the implementation of the final rule was temporarily on hold, the Department of Justice, on behalf of the Department of Labor, appealed the court’s decision on Dec. 1. This means that employers and employees alike are waiting to see how the court rules as to whether the injunction will remain in force, and whether the final rules will ultimately go into effect. There also was much confusion and flux around this issue as to what the position of the new presidential administration would be.

As recently as June 30, the Department of Labor under the new presidential administration filed a brief in this matter. Basically, the position of the new administration is similar to that of the prior administration. Essentially, it is asking the court to affirm that the Department of Labor had the authority to issue the rules with the new salary thresholds. The Department of Labor, however, has asked that the court not address the actual proposed salary thresholds, because it would like the opportunity to propose new numbers through a new rule-making process.

This raises a host of questions for employers about whether the new regulations will come into effect. If so, will the numbers change? And when would the effective date for such regulations be?

Employers should diligently keep an eye on this developing matter. Employers with questions about next steps, should contact an attorney of their choice.

This story was originally published July 18, 2017 at 12:42 PM with the headline "Overtime rules are back, and labor department wants right to set salary limits."