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Federal Judge Strikes Down Overtime Rule

The ruling invalidated the Obama administration’s regulation that expanded overtime protections.
September 1, 2017

​NEW YORK – Yesterday, a federal judge in Texas overturned an Obama administration rule that expanded overtime protections, Law360 reports. U.S. District Judge Amos Mazzant said the U.S. Department of Labor didn’t use a salary-level test correctly to figure out which employees would be exempt from overtime compensation. According to the Judge, Congress intended for employees to be exempt from overtime if they actually perform “white collar” jobs, so an employee cannot be found exempt from overtime by salary alone.

His ruling grants summary judgment to the challengers of the 2016 rule that bumped the minimum salary threshold from approximately $23,000 per year to around $47,000 annually to qualify for the Fair Labor Standards Act’s “white collar” overtime exemption. The rule had also raised the overtime eligibility threshold for highly compensated employees to around $134,000. The Plano Chamber of Commerce and more than 55 other business groups had filed a lawsuit challenging the rule, which was consolidated with a similar challenge brought by the State of Nevada and 20 other states. The rule, which was supposed to go into effect in December 2016, was placed on hold in November of that year by Judge Mazzant. 

“The department has exceeded its authority and gone too far with the final rule,” Mazzant said. “The department creates a final rule that makes overtime status depend predominately on a minimum salary level, thereby supplanting an analysis of an employee’s job duties. Because the final rule would exclude so many employees who perform exempt duties, the department fails to carry out Congress’s unambiguous intent.”

Retailers and restaurants had been watching the court case closely. “The Department of Labor under the previous administration overstepped its authority in making changes to the federal overtime rule,” Angelo Amador, executive director of the Restaurant Law Center, told QSR Magazine. “Today’s decision to invalidate the rule demonstrates the negative impacts these regulations would have had on businesses and their workers. We will continue to work with DOL on behalf of the restaurant industry to ensure workable changes to the overtime rule are enacted .”

In the meantime, the Trump administration DOL has requested feedback on how to revise the Obama-era rule, with comments due on September 25. NACS plans to file comments.