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BREAKING NEWS: Court Issues Injunction Blocking DOL Overtime Rules

by Mary Erin Casale

Federal Judge Blocks Overtime Rule

Late on Tuesday, a federal district judge in Texas issued a preliminary injunction blocking implementation of the Overtime Final Rule, ruling that the U.S. Department of Labor exceeded its authority. Barring a last-minute appeal, the overtime rule will not go into effect as scheduled on December 1 because of this decision.

However, the state salary threshold in Maine WILL INCREASE on January 1 due to voters passing a minimum wage increase via referendum. Current statute requires the annual salary threshold to be 3,000 times the current minimum wage or the rate established by federal law, whichever is higher. Right now, the current federal rate will remain at $24,000, as the new rate is held up in the court system. Maine’s minimum wage will be increasing to $9.00 per hour, which translates to a new salary threshold of $27,000 ($519.23 per week), superseding the federal rate. This threshold will increase each year the state minimum wage does, eventually tied to the Consumer Price Index (CPI).

The issue at hand in the the court case is the question of which employees qualify for an exemption from the requirement under the federal Fair Labor Standards Act (FLSA) that most employees are entitled to time and a half overtime pay for work in excess of 40 hours in a week. The FLSA exempts from the overtime requirement “any employee employed in a bona fide executive, administrative, or professional capacity,” often called the EAP or “white collar” employees. Current regulations require that employees must possess the duties of executives, administrative workers, or professionals and be paid more than a minimum salary. The overtime rule published by the Labor Department in May, and set to go into effect on December 1, would have more than doubled the existing “salary level test” for exempt white collar employees from $455 per week ($23,660 per year) to $913 per week ($47,476 per year).

Twenty-one Governors and Attorneys General filed suit in federal court challenging the overtime rule on several grounds. Siding with the states, Federal Judge Amos Mazzant held that the white collar exemption is clearly based on the duties that individual employees perform, and that the Labor Department did not have the authority to create a different or higher standard. Specifically, he ruled: “Congress gave the Department the authority to define what type of duties qualify [for the overtime exemption] — it did not give the Department the authority to supplant the duties test and establish a salary test that causes bona fide EAP’s to suddenly lose their exemption ‘irrespective of their job duties and responsibilities.’”

The judge issued a nationwide preliminary injunction. The Department of Labor is expected to appeal the decision, meaning that injunction could be lifted and the overtime rule put in place in a matter of weeks or months. Employers should note that this is only a temporary injunction, not a permanent one. The injunction simply prevents the regulations from going into effect on December 1. There will be a decision issued at a later date on the actual merits of the case, so changes in the FLSA salary threshold for exemption may be back. We’ll be updating this site as we get more information.

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