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DOL Overtime Rule Officially Struck Down, What To Expect Next

Labor & Employment Alert Christopher L. Nickels, Sean M. Scullen, Michael Aldana, Susan McCaffery Zoeller, Craig J. O'Loughlin, Gary R. Clark, Otto W. Immel

On August 31, 2017, just before the Labor Day holiday, a Texas federal judge formally struck down the controversial Obama-era Department of Labor (DOL) rule that sought to expand overtime protections for millions of workers. The Obama DOL rule was finalized in May 2016 and was set to take effect on December 1, 2016. It sought to raise the minimum salary threshold under the FLSA's "white collar" exemptions from $455 per week (i.e., $23,660 per year) to $913 per week (i.e., $47,476 per year). The rule, however, never went into effect, because on November 22, 2016, the Texas federal judge issued a nationwide injunction preventing it from being implemented. 

After the November 2016 injunction was issued, the Obama DOL appealed the Texas decision to the Fifth Circuit Court of Appeals. In light of the August 31, 2017 decision invalidating the rule, on September 6, 2017, the Fifth Circuit granted the Trump DOL’s request to drop its appeal. As a result, the overtime rule—at least in the form proposed by the Obama DOL—is now dead. But many observers do not expect the issue of overtime expansion to go away.

Indeed, Labor Secretary Alex Acosta told congress on several occasions this year that the Trump DOL would be seeking to expand overtime protections, although likely by setting a minimum salary that was lower than $47,476 per year, which many criticized as being too burdensome on employers. In July, the DOL issued a request for information seeking public input on ways to revise the Obama-era rule. 

As a result, we expect see continued activity on this issue. It seems likely that some expansion of overtime protections will occur via an increase in the minimum salary, although perhaps in an amount that is more palatable to business owners. At this point, nothing is certain. Employers who prepared for the Obama rule to take effect last December should continue to monitor any proposed overtime expansions from the Trump administration. 

We will continue to monitor the status of overtime law and will provide further updates as they develop. For more information or assistance complying with wage and hour law requirements, please contact Christopher L. Nickels at (414) 277-5519 / [email protected] , Sean M. Scullen at (414) 277-5421 / [email protected], Michael Aldana at (414) 277-5151 / [email protected], Susan M. Zoeller (317) 399-2865 / [email protected], Craig J. O’Loughlin at (602) 230-4613 / [email protected], Gary R. Clark at (312) 715-5040 / [email protected] , Otto W. Immel at (239) 659-5041 / [email protected], or your Quarles & Brady attorney.