What you need to know
A federal judge struck down the Department of Labor (DOL) overtime rule, which would have raised the Fair Labor Standards Act (FLSA) minimum salary threshold from $23,660 to $47,476.
The federal court’s decision is the final ruling on the subject, unlike the ban in November 2016 that merely halted the rule from taking effect.
While the DOL can still challenge the ruling, experts say this is highly unlikely. In the decision, the judge noted that an increase to the FLSA salary threshold was legally permissible, but added that the DOL overstepped by nearly doubling it. The DOL is now expected to continue the rule-making process and eventually raise the threshold to a “reasonable limit.”
However, it is uncertain what limit would be deemed reasonable. The court stated that adjusting the rule’s 2004 salary threshold for inflation would be an acceptable option.
Another factor in the court’s decision was what it considered a circumvention of additional tests to determine FLSA exemptions. Under the current rule, employees must perform certain duties—in addition to earning the minimum salary limit—to qualify for an FLSA exemption. The court said that nearly doubling the minimum salary threshold made the duties test irrelevant.
What happens next
Based on the court’s summary judgment and noted opinions, the DOL will need to present a more reasonable salary threshold if it wishes to pass any future overtime rules. This means employers should continue operating as usual, but they should be aware that an increase might come down the road eventually.
Helpside will keep you updated with any future developments on this matter. In the meantime, please contact our HR experts with any questions you may have.