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What Ever Happened to that Obama-Era Overtime Rule?

About a year ago, employers were gearing up for the implementation of the Department of Labor’s updated overtime rules, which would have doubled the baseline salary-level eligibility requirement for white-collar exemptions to the FLSA’s overtime requirements (up to $47,476 from $23,660). However, to the delight (and admitted confusion) of many businesses and employment lawyers, Judge Amos Mazzant enjoined the implementation of those rules, and this past August ruled them to be unlawful because, in the Judge’s view, the doubling of the salary level “effectively eliminates a consideration of whether an employee performs” executive, administrative, or professional duties, which is intended to be the central inquiry of the white-collar exemptions.

So, the rule is dead, right? Well, not so fast. On October 30, 2017, the DOL filed a notice indicating it would appeal the ruling invalidating the rule. To be clear, the rule will not go back into effect unless the Court of Appeals overrules Judge Mazzant’s ruling. However, it does not appear that the DOL will seek that result. The DOL issued a statement following the filing of the notice stating that it will ask the Circuit court to stay the case so it can have some time to sort out exactly how it wants to proceed.

So, for now, nothing changes for employers who would be affected by this rule. Instead, we’ll continue to watch and wait to see what happens next. To venture a guess, the DOL will most likely seek a more modest increase in the salary level than the one proposed in the Obama-era regulation. Further, although the DOL may proceed with its appeal to implement its original salary-level increase, this does not necessarily mean that, at the end of the day, the final rule will increase the salary level dramatically (or at all). Whatever the result, as with any new regulation, many employers will still have to make some changes to comply with the new standard. The extent and burden of those changes, however, remains to be seen.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.