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Updates to federal overtime rule, delays continue

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The delays continue regarding the overtime rule that was originally set to go into effect on December 1, 2016. This rule would have raised the salary threshold for exempt employees – those employees who were not entitled to overtime – to $47,476 from $23,660. Implementation of this rule was delayed by a court decision on November 22, 2016. The Trump administration filed its brief on June 30, 2017 for the appeal started by the Obama administration. 

That brief did not defend the portion of the Obama administration rule that would have set the salary threshold at $47,476. However, it did defend the Department of Labor’s general authority to set the salary threshold for overtime pay. This means the agency wants to maintain that it has the authority to set the salary threshold for overtime pay, but is not interested in defending the particular threshold set by the previous administration.

The Fifth Circuit’s ruling on this issue is still months away and it is difficult to predict the outcome. However, it is possible and even likely that the Fifth Circuit could adopt the Trump agency’s argument that the Department of Labor has the authority to set salary thresholds but that it will not uphold the actual salary threshold set by the Obama administration. This means the status quo could remain.

In the meantime, the Department of Labor has taken some initial steps to begin rulemaking on this precise issue. It is likely that the Department will thus set a different salary threshold, but one that is lower than the one set by the Obama administration. Comments by the Labor Department Secretary, Alexander Acosta, seem to indicate he is in favor of a $33,000 threshold, though it is far too early to know where the Department is heading on this issue, or whether it will even attempt to set a new threshold.

We will write additional blog posts on these matters as they develop. In the mean time, please contact me if you have any questions or concerns regarding the rules and laws as they currently stand or how potential changes could impact your company.