U.S. Department of Labor Weighs in on Increase in “White Collar Exemption” Overtime Salary Threshold

            In its June 30, 2017, Fifth Circuit Court of Appeals filing, the U.S. Department of Labor (“DOL”) provided its first indications of how the new Administration intends to alter the landscape of mandatory overtime rules.[1] Picking up where the Obama Administration’s May 2016 Final Rule was left, currently under appeal after a November 2016 preliminary injunction blocked its enforcement, the DOL indicated it wants more workers to be eligible for overtime pay, just not as many as the Obama Administration.[2]

In its filing with the Fifth Circuit, the DOL did not ask the court to address the soundness of the May 2016 Final Rule’s salary level threshold of $47,476. The DOL stated that, at this time, it is not advocating for a specific salary level, and instead plans to undertake rulemaking to determine what the salary level would be.[3] The DOL, however, requested that the Fifth Circuit determine whether the DOL has the statutory authority to set a salary level in the first place.[4]

Practical Takeaway

The May 2016 Final Rule, which raised the “white collar” overtime exemption threshold from $455 per week (the equivalent of $23,660 per year) to $913 per week (the equivalent of $47,476 per year), would have made approximately 4.2 million employees newly eligible for overtime.[5] Based on comments made by DOL Labor Secretary Acosta during his confirmation hearing, and the DOL’s recent filing, we expect the DOL will attempt to modestly raise the threshold amount for salaried employees to qualify for the Fair Labor Standards Act (“FLSA”) white collar exemption. At this time, employers should ensure that their salaried employees who are treated as exempt under the FLSA are employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in the DOL’s regulations,[6] and that such employees earn at least $455/week, or $23,660 per year.

[1] State of Nevada, et al. v. United States Department of Labor, et al., Case No. 16-41606 (5th Cir.)

[2] DOL Secretary Anthony Acosta has previously said that he agreed with the prior administration’s position—that the salary threshold under which workers are entitled to overtime should be increased from its current level of $24,000 per year—but criticized the Obama Administration’s efforts to double the threshold. Josh Eidelson, Trump Labor Nominee Acosta Says Overtime Threshold Ripe for Review, Bloomberg Politics (Mar. 22, 2017), https://www.bloomberg.com/news/articles/2017-03-22/trump-labor-pick-to-tell-senators-he-s-on-the-side-of-the-law.

[3] Appellee’s Reply Brief at *17, June 30, 2017.

[4] Id.

[5] See U.S. Department of Labor Wage and Hour Division Questions and Answers, https://www.dol.gov/whd/overtime/final2016/faq.htm.

[6] 29 C.F.R. part 541.

 

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