On Tuesday, November 22, 2016, a federal judge placed a nationwide hold on a new Department of Labor rule, set to go into effect on December 1, 2016, that would have made millions of additional workers eligible for overtime pay. The Fair Labor Standards Act exempts from its overtime requirement “any employee employed in a bona fide executive, administrative, or professional capacity.” 29 U.S.C. § 213(a)(1). The existing Department of Labor rule provided a salary threshold of $23,660, meaning that salaried employees making less than $23,660 do not qualify for the exemption, and are still entitled to overtime pay for hours worked in excess of 40 hours per week. The salary threshold is a mechanism to “screen[] out obviously nonexempt employees[.]” Nevada, et al. v. U.S. Dep’t of Labor, et al., 4:16-cv-00731, slip op. at 13 (E.D. Tex., Nov. 22, 2016).
The new rule set to go into effect on December 1, 2016 would have increased the salary threshold from $23,660 to $47,476. The court concluded that this increase creates a “de facto salary-only test,” because millions of workers who currently fall below the salary threshold will automatically become eligible for overtime, without any change to their job duties. Because the FLSA’s language makes clear that Congress intended the question of whether an employee is salary exempt to turn on the employee’s job duties, not the employee’s salary level, the Department of Labor exceeded its authority by doubling the salary threshold.
