Labor Department Seeks Appeal and Stay of Overtime Ruling

Eric Paltell
Eric Paltell

In a move that surprised many observers, on October 30, 2017, the United States Department of Labor appealed a federal judge’s August ruling striking down the Obama-era overtime regulations.  In a statement issued by the DOL, the agency explained that it will also file a motion to freeze the appeal while it undertakes further rule making on what the appropriate salary level  for exempt status should be.

Here’s a quick recap on how we got to this point.  In May 2016, the DOL issued a “Final Overtime Rule” which more than doubled the salary required for an employee to be exempt from overtime, increasing it from  $23,660 to $47,476.  In November 2016, Judge Amos Mazzant of the United States District Court for the Eastern District of Texas issued a preliminary injunction to stop the DOL from enforcing the new rule. On August 31, 2017, Judge Mazzant made that injunction permanent, holding that the Final Rule’s salary level requirement exceeded the DOL’s authority.

Of course, in the midst of this legal wrangling, Donald Trump was elected President, and many observers concluded that the Trump DOL would not continue to pursue a challenge to Judge Mazzant’s rulings. However, in July 2017, the DOL published a Request for Information seeking public input on what changes should be made to the current overtime rules. That comment period has ended, and more than 140,000 comments have been received.  Additionally, Labor Secretary Acosta has suggested at his confirmation hearing and in other public comments that a salary level threshold in the $33,000 range may be appropriate. The $33,000 figure is what the current  $23,660 level would equate to if it were adjusted for inflation, as that threshold was set  back in 2004.

In addition to seeking to buy time to issue a revised salary standard, the DOL may be appealing Judge Mazzant’s ruling because of its reasoning. Judge Mazzant found that, in the Final Rule, the DOL relied too heavily on the salary test, as apposed to looking at the duties workers performed.  This reasoning  seemed to be at odds with decades of DOL enforcement policy relying on the use of a minimum salary test – in addition to a duties test – to determine whether an employee is exempt from overtime.

The United States Court of Appeals for the Fifth Circuit, which will hear the appeal of Judge Mazzant’s ruling, is expected to grant DOL’s request for a stay.  Assuming it does, there is good chance we will  see the Trump DOL’s proposed changes to the overtime rules in early 2018.


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