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Latest Update on Court Proceedings over DOL’s Overtime Salary Regulations

Thousands of employers affected by the US Department of Labor’s Minimum Salary Rule for Overtime Pay Exemptions have anxiously awaited the outcome of litigation that blocks the rule from going into effect as intended, on December 1, 2016.

A Federal District court in Sherman, Texas ruled just before Thanksgiving that the DOL exceed its authority in issuing the rule. However, the DOL promptly appealed that decision to the U.S. Court of Appeals for the Fifth Circuit in New Orleans. The Appellate Court granted the DOL’s motion for expedited proceedings and, on December 15th, the DOL filed its brief arguing that the lower court’s decision was flawed. Among other things, the DOL argued that when Congress enacted the Fair Labor Standards Act (FLSA) in 1938, and since then, the DOL was authorized to set minimum salary levels for professional, executive and administrative positions exempt from the FLSA’s overtime requirements.

The appellees – 21 states and business organizations – now have until mid-January to file briefs with the appellate court and then the DOL’s final reply is due the end of that month. Presumably, the 5th Circuit Court will then schedule oral arguments in February and a decision could come as early as the end of February, but more likely in March 2017 or later.

Of course, by the time the DOL’s appeal will have worked its way through the court system, the US will have a new President who is outspoken against what he refers to as “excessive government regulation”. This, coupled with Republican control of Congress, could well mean that the overtime salary exemption issue will be determined through legislation, rather than DOL regulation. But, whereas the outcome of legislation would be an “all or nothing” proposition – either the DOL’s rule stays blocked or is allowed to take effect, as is – new legislation could take many forms. For example, some Republican members of Congress have already proposed increasing the minimum salary for overtime exempt status, but by a much less drastic increase than that involved in the DOL’s rule.

The issue isn’t going away. Despite the uncertainty, employers can expect 2017 to bring a new legal landscape to issues of overtime exemptions and minimum salaries. Just when or how this happens remains to be seen; however, it seems likely that the current stale mate will continue at least into March of 2017.

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