Finalized in the last year of the Obama Administration, the Department of Labor Overtime Regulation, broadened federal overtime pay regulations to cover nearly 4 million workers. Enforcement of the regulation would have doubled the minimum threshold required to qualify for the Fair Labor Standards Act’s white-collar exemption to $47,476 per year, and increased the overtime eligibility threshold for highly compensated workers from $100,000 to about $134,000.
Texas, Nevada and nineteen other states quickly filed suit challenging the rule, and their case was consolidated with a lawsuit filed by business groups. They argued that the change would force many state and local governments, as well as private business, to substantially increase their employment costs. U.S. District Judge Mazzant entered a preliminary injunction, in November of last year, just days before the change in the regulation was scheduled to take effect. He ruled that the states were able to show a likelihood of success in their challenge of the rule, as well as irreparable harm, if it went into effect and that the Department of Labor (“DOL”) failed to show that it would be harmed if the implementation was delayed. However, the Obama Administration appealed the preliminary injunction to the Fifth Circuit before the new administration took office; and the Obama Administration also sought to fast track the proceedings in the appellate court. In the beginning of September, Judge Mazzant granted summary judgment to the Plano, Texas Chamber of Commerce and other business groups in the Texas District Court case.
Judge Mazzant noted that he was not making any determination regarding the general lawfulness of the salary level test, or the DOL’s authority to issue one. Instead, the District Court Judge said he was only evaluating the salary level test the DOL used in this instance, and found that the Department exceeded its authority by making a rule that “makes overtime status depend predominately on a minimum salary level, thereby supplanting an analysis of an employee’s job duties.” The DOL, under the new Administration, indicated to the Fifth Circuit, that the Department wanted to drop the appeal, with regard to the white-collar exemption. The Clerk’s Office for the Fifth Circuit, then entered the dismissal, without any further commentary.
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