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Obama-era overtime rule's fate still up in the air

The legal status of a new federal overtime rule that was supposed to have taken effect on Dec. 1 of last year is still far from certain. Whether the rule, which would significantly increase the number of employees eligible for overtime pay, will ever take effect in its original form depends largely on the outcome of a federal court case and on the new Trump administration.

The federal court case

In our last post on this important issue, we reported that a federal judge in Texas had ordered that the new overtime rule not go into effect pending further court review of the rule's validity. The court challenge to the rule is in a consolidated case brought by 21 states, including Texas, and groups like the U.S. Chamber of Commerce and others.

The rule has not been significantly modified for decades and the Obama Department of Labor's amendments would have increased the salary level at which an employee would become ineligible for overtime from $23,660 to $47,476. The plaintiffs objected mainly to the large size of the salary threshold jump as well as to automatic increases to the salary threshold that would take effect every three years.

The DOL appealed the nationwide preliminary injunction that prevented the rule from taking effect on Dec. 1 to the U.S. Court of Appeals for the Fifth Circuit. The trial court - the U.S. District Court for the Eastern District of Texas - refused to stop its proceedings while the appellate court considers the appeal.

At the time of this writing, two court developments are significant:

  • The District Court could grant the plaintiffs' motion for summary judgment against the DOL, which would sound the death knell for the rule. If the motion was denied, the matter would presumably proceed toward trial with the injunction remaining in place.
  • The Fifth Circuit has granted the DOL's request for an extension until May 1 to file its argument on the appeal of the injunction. The Labor Department is now represented in court by the new U.S. Attorney General Jeff Sessions' Justice Department, which requested the extension to allow review of the matter by "incoming leadership personnel."

The political developments

Presumably, the incoming leadership is the anticipated new Secretary of Labor, who has not yet been confirmed. The first nominee Andrew Puzder has withdrawn from consideration, followed by the president's nomination of Alexander Acosta, who many in the media report is likely to get broader support for confirmation.

It is unknown how Acosta or whoever becomes Labor Secretary will handle the DOL's position on the new overtime rule. In the meantime, we will keep you informed on develops in this important matter.

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