On August 31st, the Judge in charge of the court case for the new OT rules initiated by President Obama issued its final ruling. Basically he sided with the plaintiffs. For an excellent recap of the ruling I am referring you to Bill Pokorny’s blog.
The latest on the salary increase was released today. The U.S. Department of Labor has today announced that it will publish a Request for Information (RFI), Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees. The RFI offers the public the opportunity to provide information that will aid the Department in formulating a proposal to revise these regulations. The RFI solicits feedback on questions related to the salary level test, the duties test, inclusion of non-discretionary bonuses and incentive payments to satisfy a portion of the salary level, the salary test for highly compensated employees, and automatic updating of the salary level tests. The 60-day comment period for all issues raised in the RFI ends on September 25, 2017. The public may submit comments according to the instructions listed in the RFI as published in the Federal Register.
But the court case is still raging on. The DOL has decided to fight the ruling, not to defend the limits set by the Obama administration, but to defend the concept that the DOL has the right to change the salary limit. Lots of legal blogging on the topic so I wanted to include some of those blogs for you today:
On November 22, 2016, U.S. District Court Judge Amos Mazzant granted an Emergency Motion for Preliminary Injunction and thereby enjoined the Department of Labor from implementing and enforcing the Overtime Final Rule on December 1, 2016. The case was heard in the United States District Court, Eastern District of Texas, Sherman Division (State of Nevada ET AL v. United States Department of Labor ET AL No: 4:16-CV-00731). The DOL has issued the following concerning the ruling:
The rule updated the standard salary level and provided a method to keep the salary level current to better effectuate Congress’s intent to exempt bona fide white collar workers from overtime protections.
On December 1, 2016, the Department of Justice on behalf of the Department of Labor filed a notice to appeal the preliminary injunction to the U.S. Circuit Court of Appeals for the Fifth Circuit.
Since 1940, the Department’s regulations have generally required each of three tests to be met for the FLSA’s executive, administrative, and professional (EAP) exemption to apply: (1) the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (“salary basis test”); (2) the amount of salary paid must meet a minimum specified amount (“salary level test”); and (3) the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (“duties test”). The Department has always recognized that the salary level test works in tandem with the duties tests to identify bona fide EAP employees. The Department has updated the salary level requirements seven times since 1938.
The Department strongly disagrees with the decision by the court. The Department’s Overtime Final Rule is the result of a comprehensive, inclusive rule-making process, and we remain confident in the legality of all aspects of the rule.
A federal judge has blocked, for now, the new salary level test that was to go into effect December 1st. Here is an excellent blog post on what exactly that could mean for employers. The blog is by Bill Pokomy, Staci Ketay Rotman and Erin Fowler of FranczekRadelet.
With the election over and the new administration beginning work on forming one question comes to mind to a lot of payroll professionals. How will the Trump administration affect wage and hour law? I would normally have written this blog myself giving you my opinion. But this morning I received an excellent blog post on this, that I think nails the questions and takes a shot at answering them in these early days. Bill Pokorny of FranczekRadelet’s blog post “What Will The Trump Administration Mean for Wage and Hour Law” this morning is a good read for payroll professionals who are looking ahead to 2017.
The battle over the new overtime rules set to take effect on December 1 is still raging on. In addition to the court case by 21 states, the House of Representatives has now entered the battle. With a 246-177 vote on September 28, the House passed a measure that would delay the implementation of the final overtime rule for six months. The bill, know as the Regulatory Relief for Small Businesses, Schools, and Nonprofits Act, H.R. 6094, was passed one day after the court case for the states. The sponsors of the bill state that by delaying the implementation of the final rule on overtime, this will give workers, small businesses, nonprofits and colleges and universities more time to prepare for the “dramatic changes” resulting from the rule. The bill has been sent to the Senate for consideration.
What do you think? Should the implementation be delayed to allow extra time? Or could all of these types of employers simply make those employees affected hourly thereby not having to worry about the salary level? Or is this a political ploy to have the implementation after the end of the current administration? Answer our poll.and/or give us your comments.
The battle to stop the new overtime rules from taking effect has begun in earnest. 21 states, including Arizona, Kansas, Oklahoma, Nevada, Texas and Utah, and the U.S. Chamber of Commerce have filed a lawsuit in Texas challenging the Department of Labor’s (DOL) final overtime rules under the Tenth Amendment of the U.S. Constitution and the Administrative Procedures Act. Nevada Attorney General Adam Paul Laxalt led the coalition of states filing the suit. According to the suit the final rule contradicts the statutory text of the exemption, as well as Congressional intent. The suit also raises the specter of the federal executive depleting state budgets in an effort to impose its policy will on the states.
However the DOL has responded by issuing the following statement by Secretary Tom Perez: “We are confident in the legality of all aspects of our final overtime rule. It is the result of a comprehensive, inclusive rule-making process. Despite the sound legal and policy footing on which the rule is constructed, the same interests that have stood in the way of middle-class Americans getting paid when they work extra are continuing their obstructionist tactics. Partisan lawsuits filed today by 21 states and the U.S. Chamber of Commerce seek to prevent the Obama administration from making sure a long day’s work is rewarded with fair pay. The overtime rule is designed to restore the intent of the Fair Labor Standards Act, the crown jewel of worker protections in the United States. The crown jewel has lost its luster over the years: in 1975, 62 percent of full time salaried workers had overtime protections based on their pay; today, just 7 percent have those protections – meaning that too few people are getting the overtime that the Fair Labor Standards Act intended. I look forward to vigorously defending our efforts to give more hardworking people a meaningful chance to get by.”
Let’s see where the battle takes us by December 1!
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