Department of Labor’s Authority to Set Salary Threshold Now in Question
A Texas federal judge last week issued summary judgment in favor of nearly 60 business groups and 21 states, striking down a 2016 Obama administration rule raising the minimum salary for overtime exemptions to $47,000.
In fact, U.S. District Judge Amos Mazzant’s ruling calls into question the U.S. Department of Labor’s (DOL) authority to set a salary threshold for overtime exemptions at all. Though the judge didn’t issue a ruling about the legality of the salary level test itself, he noted that when the DOL set the threshold at $47,000 it rendered useless the “duties test” that Congress intended to ensure employees whose responsibilities include performing in a “bona fide executive, administrative or professional capacity” (or EAP) be exempt from overtime pay.
Judge Mazzant’s decision also makes uncertain the future of an ongoing appeal at the Fifth Circuit over a November 2016 injunction by that court that blocked the Obama administration rule from taking effect.
In an interview, Pillsbury Employment special counsel Julia Judish told Law360 that even if Judge Mazaant’s invalidation of the rule renders the Fifth Circuit appeal moot, the “underlying issues” around the DOL’s authority to set an overtime salary threshold “remain very live.”
“Maybe the can will be kicked down the road,” Judish said. “If the DOL issues a revised regulation, the appeals court will say, ‘Let’s take it up then.’”
Regardless of the appeal’s fate, Judish and other lawyers expect that the DOL will want to revisit the Obama-era rule, both because the agency has an interest in retaining the authority to set the salary threshold and because the last change to the threshold was more than a decade ago in 2004. As Judish points out, the level set 13 years ago is now below the poverty line for a family of four and even those who opposed the Obama administration’s salary threshold have supported a “modest increase.”