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Judge blocks change to overtime exemption

Federal Judge Amos Mazzant of the U.S. District Court for the Eastern District of Texas issued a nationwide preliminary injunction on Nov. 22 blocking the Overtime Final Rule from going into effect on December 1, finding that the U.S. Department of Labor exceeded its authority.

Siding with 21 states that challenged the rule, the judge ruled that the U.S. Department of Labor exceeded its authority in issuing a salary level test, and that the exemption for executive, administrative and professional employees (the White Collar Exemption) is defined by the duties of the employees, not how much they earn. In making the decision, the Judge is striking down not just the pending overtime rule, but longstanding DOL policy modified in both Democratic and Republican administrations.

At issue is the question of which employees qualify for an exemption from the requirement under the federal Fair Labor Standards Act (FLSA) that most employees are entitled to time and a half overtime pay for work in excess of 40 hours in a week. The FLSA exempts from the overtime requirement “any employee employed in a bona fide executive, administrative, or professional capacity,” often called the EAP or “white collar” employees. Current regulations require that employees must possess the duties of executives, administrative workers, or professionals and be paid more than a minimum salary. The overtime rule published by the Labor Department in May, and set to go into effect on December 1, would have more than doubled the existing “salary level test” for exempt white collar employees from $455 per week ($23,660 per year) to $913 per week ($47,476 per year).

A hearing had been tentatively scheduled for Monday, Nov. 28, during which the injunction could be made permanent. The Department of Labor is expected to appeal the decision, meaning that injunction could be lifted and the overtime rule put in place in a matter of weeks or months.

The Providers' Council is continuing to gather information on this fluid issue, and will keep members apprised of changes as they happen. The Council will also work with counsel to determine next steps for members as the overtime issue is resolved.