Court Determines Overtime Rule ‘Invalid’

On August 31, a federal judge invalidated a U.S. Department of Labor rule from the Obama-era to expand overtime eligibility to an additional 4 million workers. In his decision, Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas, said the rule put too much emphasis on salaries in determining overtime pay and did not adequately consider an employee’s regular duties.

The rule was set to take effect on December 1, 2016, but was halted by a preliminary injunction just nine days prior to its implementation. If implemented, the salary level under which employees qualify for overtime pay would have increased from $455 per week ($23,360 annually) to an estimated $913 per week ($47,476 annually). In addition, the rule would have provided for automatic updates to the threshold every three years.

A broad coalition of business groups, and 21 states, had challenged the rule on the grounds that DOL exceeded its authority by raising the salary threshold too much and providing automatic updates to the threshold without stakeholder input.

The issue of overtime eligibility is not likely to go away. It is anticipated that the salary threshold will again be reviewed and new limits set.

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