U.S. District Court Strikes Down Obama’s Overtime Rule

The Obama overtime rule will not take effect, but changes to overtime rules are likely still coming down the pike.

A U.S. District Court in Texas ruled for plaintiffs who challenged the Department of Labor’s 2016, rule. The Justice Department, which defended the rule, formally ended its attempt to impose the rule. 

  • The Overtime Rule: Once an employee works over 40 hours a week, employees must be paid time-and-a-half. The exemptions to this are workers whose duties are “managerial” in nature, and reach a certain salary threshold.
  • The conflict began when the U.S. Department of Labor announced a new rule in May 2016 that would raise the salary threshold from $23,660 to $47,476 starting in December to allow for more employees to be eligible for overtime pay.

Why this is Important:  ISRI members that were caught off guard by the rule can relax a little now that that the court said the Obama administration overstepped its authority by making these increases without reviewing the job duties. The rule could have swept in some management workers who are supposed to be exempt from overtime protections.

Be Aware: Businesses should be alert for revised changes coming down the pike as the judge said that the Labor Department does have the ability to use a salary test, but must base eligibility for overtime pay on a combination of workers’ duties and wages. 

  • A rise in the salary threshold is likely coming as the Trump Administration has requested public comments on increasing the salary level.

Contact Danielle Waterfield with questions, or for more information.

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