September 5, 2017

Court Strikes Down Obama-Era Overtime Rule

A Texas federal judge has issued a final ruling striking down the Obama administration’s overtime rule, invalidating the rule on the grounds that it went too far, essentially making all employees who perform exempt duties, but who make less than the high salary threshold “non-exempt.” The judge did note that the Department of Labor (DOL) is not prevented from using a particular salary level, though the DOL lacked authority under the Fair Labor Standards Act to use a salary threshold alone to determine whether an employee qualified for the “white collar” exemptions. The DOL, however, does have the authority to make adjustments to the “duties” test. In this case, the regulations only raised the salary and compensation thresholds but made no changes to the duties tests.

The regulations, which would have more than doubled the salary threshold for administrative, executive, and professional exemptions from the minimum wage and overtime requirements of the FLSA, were due to take effect on December 1, 2016, before being enjoined nationwide by the same federal court in Texas. The salary level under the invalidated rule would have been significantly higher than California’s minimum annual salary threshold of $43,680, or $3,640 per month.

For more information, contact Jason Resnick at (949) 885.2253.