The proposed new federal law that would raise the salary threshold that exempts employers from paying overtime is more on-again/off-again than a high school romance.
The latest salvo occurred last week when a federal judge in Texas blocked the Department of Labor's (DOL) new overtime rule, which would have raised the Fair Labor Standards Act's (FLSA) salary threshold for exemption from overtime pay from $23,660 to $47,476. For many integrators, the judge's ruling is a sigh of relief because it would have required them to start paying overtime to any employee earning less than $47,476 starting on December 1, 2016.
The practical import of the decision is that the new rule is frozen and therefore will not be enforced by the DOL. Thus, the current salary threshold of $455 per week (or $23,660 annually) remains in effect for white collar exempt employees under the FSLA.
Specifically, judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas granted a preliminary injunction on Nov. 22 in a lawsuit challenging the DOL's authority to raise the salary threshold. The lawsuit was brought by 21 different states, the U.S. Chamber of Commerce and other business groups.
There is already another bill in Congress aimed at creating a gradual implementation of the law that is supported by the NAHB and CTA.
SEE RELATED: How Will New DOL Overtime Law Affect Integrators?
According to Mazzant, “A preliminary injunction preserves the status quo while the court determines the department's authority to make the final rule as well as the final rule's validity.”
In his decision, Judge Mazzant ruled that the DOL exceeded its authority and ignored Congressional intent when it published its Final Rule raising the minimum salary level from $23,660 annually to $47,476 annually. In addition, the Court ruled that the DOL lacked authority to impose the automatic salary increase provision found in the rule.
However, the issuance of an injunction does not mean this is the end of the case. According to news reports, the Obama Administration's DOL plans to appeal. Integrators should stay tuned for more back and forth on this issue.
