Employment Law Report

Department of Justice Drops Appeal on Obama Overtime Rule

By Daniel Reed

The Justice Department will no longer fight to preserve President Barrack Obama’s proposed overtime rule that a federal judge declared invalid in August.

The Obama-era rule would have required employers to pay overtime to most salaried workers who earn less than $47,476 annually, a sharp increase from the current annual salary cap of $23,660.  The rule would have extended mandatory overtime pay to more than 4 million U.S. workers.  A court challenge to the rule was filed by business groups and 21 states in the Eastern District of Texas. (Nevada v. DOL, E.D. Tex., No. 4:16-CV-731).

In August of this year, U.S. District Judge Amos Mazzant, an Obama appointee,  struck down the overtime rule finding that the Department of Labor (“DOL”) exceeded its authority in adopting the new salary threshold.  Judge Mazzant noted in his opinion that Congress intended eligibility for overtime to be primarily based upon whether workers perform certain “white collar” duties.

Interpreting a section of the Fair Labor Standards Act, Judge Mazzant found that “[n]othing in Section 213(a)(1) allows the [DOL] to make salary rather than an employee’s duties determinative of whether a ‘bona fide executive, administrative, or professional capacity’ employee should be exempt from overtime pay.”

Five days after Judge Mazzant’s ruling, the Department of Justice (“DOJ”) requested the U.S. Court of Appeals for the Fifth Circuit to dismiss the DOJ’s pending appeal of an earlier Mazzant ruling that temporarily blocked the rule before it was to take effect late last year.  With that appeal voluntarily dismissed and the current Justice Department unlikely to appeal Judge Mazzant’s most recent ruling, the Obama-era rule is effectively dead.

In the meantime, the Trump administration is considering revising the overtime rule.  In July, the DOL released a request for information, seeking public input on revising the Obama-era rule.  Labor Secretary Alexander Acosta has signaled that the DOL may issue a new rule with a more moderate salary threshold increase, potentially in the low $30,000 range.

Daniel P. Reed
Daniel Reed is a member of Wyatt’s Litigation & Dispute Resolution Team.  He assists with the representation of a broad range of clients in a variety of cases. Read More