On Thursday, August 31, 2017, Judge Amos Mazzant of the Eastern District of Texas invalidated the Obama Administration’s 2016 Department of Labor (DOL) rule doubling the salary threshold for exempting white-collar workers from overtime pay.  Judge Mazzant stated that the DOL had exceeded its authority by implementing a salary-level test that effectively eliminated the duties test for determining which workers qualify for an exemption.

In State of Nevada et al. v. U.S. Department of Labor et al., the states of Texas and Nevada, as well as over 55 business groups, challenged the rule, which raised the minimum salary threshold required to qualify for the Fair Labor Standards Act’s “white collar” exemption to just over $47,000 per year and increased the overtime eligibility threshold for highly-compensated workers from $100,000 to about $134,000.  In his decision, Judge Mazzant stated that the rule—which would have made over 4 million more workers eligible for overtime—“makes overtime status depend predominately on a minimum salary level, thereby supplanting an analysis of an employee’s job duties.”  Further, “[b]ecause the final rule would exclude so many employees who perform exempt duties, the department fails to carry out Congress’ unambiguous intent” that the overtime exemption apply to employees who work in a “bona fide executive, administrative or professional capacity.”

It seems unlikely that the Trump Administration’s DOL will appeal its “loss” before Judge Mazzant, but other cases regarding the overtime rule are pending.  The Fifth Circuit is currently considering an appeal of a preliminary injunction Judge Mazzant issued in late 2016 blocking the rule just days before it had been scheduled to take effect.  Whatever the outcome of that appeal, the new DOL rule has been dealt a difficult blow from which it might not soon recover.

The Nevada v. DOL slip opinion is available here.

Keesal, Young & Logan Employment Group

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