The Department of Labor is abandoning the new salary regulation that set a $47,476 threshold salary for employees to be exempt from overtime and intends to go back to the drawing board, based on a brief filed by the DOL on June 30, 2017.
The regulation, which more than doubled the current salary threshold, would have made an estimated 4 million more workers eligible for overtime. While a Texas court last November enjoined the new rule from taking effect and the DOL appealed the ruling, many employers began re-assessing their exempt workers’ salaries and making adjustments. The Texas court said that Congress intended the “white collar exemptions” – executive, administrative and professional – to apply to employees doing actual executive, administrative and professional duties, without reference to a minimum salary level. The court further concluded that the DOL exceeded its delegated authority and ignored Congress’s intent “by raising the minimum salary level such that it supplants the duties test.”
Notably, the DOL did not announce its intent to withdraw the regulation via press release. Instead, in a brief filed on June 30, 2017 in the pending appeal, the DOL asked the appellate court not to address the validity of the specific salary level set by the 2016 final rule. The DOL requested that the appellate court address only the threshold legal question of the DOL’s statutory authority to set a salary level, arguing the court should reverse the November 2016 preliminary injunction and affirm the DOL’s ability to include a salary level test for the FLSA white collar overtime exemptions. In its brief, the DOL stated that it “has decided not to advocate for the specific salary level ($913 per week) set in the final rule at this time and intends to undertake further rulemaking to determine what the salary level should be.”
For now, employers must wait to see whether the court will find that DOL has the authority set a minimum salary threshold and if it does, what that threshold will be.