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What's Happening With the New Overtime Exemption Rules?

    Client Alerts
  • December 21, 2016

A federal district court’s unanticipated injunction on November 22 blocked the planned December 1 implementation date for the Department of Labor’s (DOL) increased minimum salary required to claim most exemptions from the overtime provisions of the Fair Labor Standards Act. Many employers suspended implementation of salary increases or employee reclassifications pending the outcome of this litigation. Where do the rules stand as of now?

DOL appealed the district court’s decision to the Fifth Circuit Court of Appeals. The Fifth Circuit granted DOL’s motion for an expedited briefing schedule, meaning that written arguments on the appeal will be submitted before the change in administrations. However, the Fifth Circuit will not reach a decision on the appeal before Inauguration Day, meaning that the Trump administration may change DOL’s position with regard to the appeal.

President-elect Trump has expressed no direct position with regard to the overtime rule changes. However, his choice for Secretary of Labor is a restaurant industry executive who has been openly critical of the salary increase. In anticipation of a change in position by DOL, the AFL-CIO recently sought to intervene in the matter. If allowed, this could mean that the appeal could proceed even if DOL abandons the effort.

The bottom line is that no one has a good idea as to when and if the new overtime rules will ever take effect. Employers should continue to monitor the situation to determine their salary obligations for exempt employees.