Federal Court Strikes Down Department Of Labor's Overtime Rule.

Author:Ellis, John

On August 31, 2017, Judge Amos Mazzant in the United States District Court for the Eastern District of Texas issued an order granting a group of twenty-one states' and fifty-five business associations' motion for summary judgment in consolidated cases seeking declaratory and injunctive relief against a May 23, 2016 Department of Labor rule drastically increasing the minimum salary an employee must earn to qualify for the most common exemptions from the federal overtime laws. The rule was originally scheduled to go into effect on December 1, 2016 and would have increased the minimum salary an employee must earn to qualify for the administrative, executive or professional exemption from federal overtime requirements from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). The rule also would have provided for automatic increases to the minimum salary level every three years. Judge Mazzant had issued a nationwide preliminary injunction on November 22, 2016 delaying implementation of the Department of Labor's new minimum salary rule, finding that it was likely unlawful and would cause irreparable harm to the plaintiff states and business groups. Judge Mazzant's August 31, 2017 order confirms the findings in the November 22, 2016 preliminary injunction and represents a final decision at the district court level that the Department of Labor's May 23, 2016 minimum salary rule is illegal and void.

Judge Mazzant specifically held that the new minimum salary rule was unlawful because it exceeded the Department of Labor's delegated authority under the federal Fair Labor Standards Act (the "FLSA"). The FLSA exempts "any employee employed in a bona fide executive, administrative, or professional capacity" from the general requirement to pay overtime, and authorizes the Department of Labor to promulgate regulations to "define and delimit" these exemptions. Because the statutory language creating the exemptions only describes types of job duties and does not have any minimum salary requirement, the court found that more than doubling the existing minimum salary by administrative rule effectively supplanted the FLSA's focus on job duties and therefore conflicted with the plain and unambiguous language of the statute. The court held in the alternative that even if the FLSA were ambiguous, the Department of Labor's drastic minimum salary increase is invalid because it reflects an unreasonable interpretation of the language creating the executive,...

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