Whatever Happened to the Proposed Increase in the Salary Threshold for Overtime?

By Kathleen Jennings (kjj@wimlaw.com)

Last year at this time, employers were scrambling to comply with the Department of Labor’s new regulations which would have more than doubled the existing salary threshold for the overtime exemption for executive, administrative, and professional employees from $23,660/year ($455/week) to $47,892/year ($921/week). The regulations were projected to make 4.2 million more workers eligible for overtime. Advocates for the increase asserted that the new regulations would bring more families closer to a living wage. Businesses argued that the regulations would increase their labor costs to the point where they would need to consider decreasing base salaries or lowering the number of their employees.

Before the regulations took effect on December 1, 2016, everything came to a halt when a federal district court enjoined implementation of the regulations. The Obama administration appealed the injunction to the Fifth Circuit of Appeals. In the meantime, Trump was elected President. Now his Labor Department is handling the appeal on behalf of the government.

So what is happening with those regulations now? Will the salary threshold for the overtime exemption increase?

We received a clue on June 30, 2017, when lawyers for the Labor Department told the Fifth Circuit Court of Appeals that the Labor Department plans to revise the pending Obama era overtime rule. They asked the court to affirm the DOL’s right to use salary levels to determine eligibility for time-and-a-half pay in the future, but to ignore the specific levels contained in the Obama-era regulation: “The Department requests that this Court not address the validity of the specific salary level set by the 2016 final rule ($913 per week), which the Department intends to revisit through new rulemaking.”

In other words, the DOL wants the court to affirm that the department has the authority to set a salary threshold under which workers are automatically eligible for overtime pay for hours worked beyond 40 per week so that the current DOL can make its own changes to that threshold amount.

When will this happen? Not anytime soon. The DOL will not initiate any new rulemaking on the salary threshold for overtime until after the Fifth Circuit rules that the DOL has the authority to do so.

What we know now: The Obama-era increase in the salary threshold for overtime will not be implemented while Trump is in office. Whether the Trump DOL will make any moves to increase that threshold, albeit at a much lower level, remains to be seen.

Kathleen Jennings, Principal is a principal in the Atlanta office of Wimberly, Lawson, Steckel, Schneider, & Stine, P.C. She defends employers in sexual harassment and other employment litigation and provides training and counseling to employers in employment matters. She can be contacted at kjj@wimlaw.com.

©2017 Wimberly Lawson

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