FLSA Overtime Final Rule Struck Down

September 6, 2017
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Category: Compliance

FLSA Overtime

On August 31, 2017, a Texas federal judge struck down the FLSA Overtime Final Rule, which aimed to increase the minimum salary threshold for the “white collar” overtime pay exemption. The ruling stated that “nothing in [FLSA] section 213” permits salary thresholds, rather than employee duties, to be the determinant of overtime pay. The judge, who had initially put the Final Rule’s December 1 rollout on hold on November 22, 2016, went on to grant summary judgment in the lawsuit filed by 21 states and business groups, which argued that the Department of Labor exceeded its authority when it increased the overtime salary threshold.

What this Means for Employers

The Final Rule would have increased the minimum salary threshold (from $23,660 to $47,476) for the “white collar” exemption from overtime pay. This increase has now been struck down, leaving the current regulation and criteria – from 2004 – in place until further notice.

However, the Department of Labor could appeal the ruling, and the Labor Secretary has submitted a Request for Information on the rule, which may indicate that further changes are forthcoming.

Under the Fair Labor Standards Act (“FLSA”), employees are – by default – eligible for overtime pay for all hours worked over 40 hours per week. Overtime pay is generally calculated at 1.5 times the employee’s regular rate of pay. Certain employees may be exempt from overtime depending on how they are paid, how much they are paid, and the job duties they perform. There are several exemptions under the FLSA (including the “white collar” exemption) and it is important to learn more about each exemption in order to ensure your employees are correctly classified under the law.

Until any further decisions are made on the minimum salary threshold, in order to be exempt under the “white collar” exemption, an employee must be paid on a salary basis, be paid more than $23,660 per year or $455 per week, and primarily perform executive, administrative, or professional job duties.

To learn more about this decision, and how these changes affect you, contact our HR-Advisor Team.

About

Anagha Krishnan is a Regulatory Analyst at Zenefits. She is focused on developments in the HR, Benefits, and Payroll space, and helping small businesses get in compliance with new regulations. A Berkeley Law grad, Anagha enjoys pop culture podcasts, trying out new tea blends, and getting to the beach when she can.

Category: Compliance


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