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September 5, 2017

Texas Judge Strikes Down Costly Obama-Era Overtime Rule

Last Thursday, Judge Amos Mazzant, III ruled that an overtime regulation issued by the U.S. Labor Department during the Obama administration was “inconsistent with congressional intent.”

The regulation, which MSCI opposed, was supposed to go into effect in December 2016, but Judge Mazzant had previously issued an order delaying businesses’ obligation to comply with the rule. The rule would have increased the minimum salary requirement for overtime from $455 per week ($23,660 a year) to $913 per week ($47,476 per year). As The National Law Review explained, the judge believed, “This significant increase would essentially make an employee’s duties, functions, or tasks irrelevant if the employee’s salary falls below the new minimum salary level. As a result, entire categories of previously exempt employees who perform ‘bona fide executive, administrative, or professional capacity’ duties would now qualify for the EAP [executive, administrative, and professional] exemption based on salary alone.”

As National Law Review also explains, “the practical takeaway” from the judge’s ruling “is that employers can feel much more comfortable that the minimum salary threshold in the 2016 final regulations will not go into effect retroactively or at some date in the near future.” That doesn’t mean the overtime threshold won’t increase in the future. The journal argues, “Although the salary level threshold for the EAP exemptions is not likely to increase to $913 per week under the Trump administration, an increase in the minimum salary level still is likely sometime in the future.” Indeed, President Trump’s labor secretary has indicated that “he believes the minimum salary level should be higher than the current $455 per week, and annualized likely should be in the $30,000 to $35,000 range.”

Stay tuned to Connecting the Dots as the Labor Department continues its work on this matter.