Last year, the Obama administration’s Department of Labor approved a new rule increasing the minimum salary necessary to qualify as exempt from overtime under the Fair Labor Standards Act (FLSA) from from $455 per week ($23,660 annually) to $921 per week ($47,892 annually). However, before these changes could take effect, the U.S. District Court of the Eastern District of Texas enjoined the new rule on December 1, 2016.
The District Court ruled that although the FLSA authorizes the DOL to “delimit” and “define” the scope of the exemption for executive, administrative, and professional employees, the statute does not permit the DOL to delimit the scope with a salary-basis test. The court further held that the new rule does not reflect a permissible construction of the FLSA, because the significant increase to the salary level creates essentially a de facto salary-only test.
The DOL appealed the ruling but on February 22, 2017, the Court of Appeal granted its request for an extension of time “to allow incoming leadership personnel adequate time to consider the issues.” In other words, the Trump administration will now decide whether to continue defending the new rule or to accept the decision of the District Court. Should it choose the latter option, that could be the death knell for the new salary-basis test – and it could even put the existing salary-basis test in jeopardy. The DOL has not announced its decision yet, but per the court’s order, it has until May 1, 2017 to file its reply brief and proceed with the appeal.
