On June 30, 2017, the Department of Justice released a brief to the 5th U.S. Circuit Court of Appeals, “that the Department of Labor (DOL) intends to revisit the $47,476 ($913 per-week) salary limit set by the rule through new rule-making.”[i] Recall from the November 2016 district court ruling, which blocked the overtime rule. The court blocked the rule based on the lack of authority by the Department of Labor to set any salary-level threshold for the exemptions. The court case has been delayed since March 2017. The new administration could set a new direction for the Department of Labor, overtime rule, and salary threshold.
Below are 4 thoughts updates on the 2016 overtime rule:
- 3-Part Test: This process to determine exemption has not changed in 75 years. To be exempt, a worker must satisfy the following; be paid on a salary basis, earn a specified salary and satisfy a duties test. Reminder the exempt levels for Executive and Administrative professionals in New York State will rise again at the end of 2017.
- Potential Changes: During his confirmation hearing, Secretary of Labor Alexander Acosta wants to raise the $23,600 threshold to “somewhere around $33,000.”[ii]
- New Rule-making: The Department of Labor will revisit the salary level(s) through the rule-making process. Under the new administration we could see no need for any courts to evaluate the 2016 rule, blocking the overtime rule and new salary threshold.
- Appeals Court: The 2016 case has not been decided yet. We could still see a ruling from the court system on the salary thresholds blocked in November 2016. Continue to monitor for any potential updates on this case.
Under the new administration we can expect to see changes to the Department of Labor and potential salary threshold increases. However, this is a federal threshold. Remember that state thresholds can be higher than federal thresholds, based on exemption status and the duties tests. This is comparable to what we see with minimum wage increases, state versus federal. If you are confused about job classifications, duties tests and threshold levels, ask for guidance. This legislation will could evolve in the court system or under the new administration.
[i] https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/dol-right-to-set-salary-threshold.aspx
[ii] https://www.shrm.org/resourcesandtools/legal-and-compliance/employment-law/pages/dol-right-to-set-salary-threshold.aspx
-Matthew W. Burr
BURR CONSULTING, LLC 