Federal court weighs in on Fair Labor Standards Act revisions

September 7, 2017|Thomas Schultz

The Fair Labor Standards Act overtime changes are on hold indefinitely after a federal court passed down their decision on August 31, 2017.

Revisions to the Fair Labor Standards Act (FLSA) have loomed on employers’ minds for the better part of the last 12 to 15 months. Elements of the Act under review included the salary basis test and the earnings test of at least $23,660 ($455/week) to qualify for the overtime exemption. As late as November 2016, the salary threshold had been set to more than double to $47,476 annually ($913/week). As a result, employers had been reviewing compensation levels and approaches to ensure compliance with the revisions.

A possible end to the overtime rule uncertainty

The U.S. District Court for the Eastern District of Texas, on August 31, granted summary judgment on behalf of the plaintiffs, essentially staying the Department of Labor (DOL) rule indefinitely. The plaintiff’s case challenged the DOL’s definition of who qualifies as an exempt employee under the FLSA .

In their decision, the court ruled, “Therefore, the Court finds Section 213(a)(1) is unambiguous because the plain meanings of the words in the statute indicate Congress’s intent for employees doing ‘bona fide executive, administrative, or professional capacity’ duties to be exempt from overtime pay.” In essence, the court affirmed a duties performed threshold as the basis for the overtime exemption.

Following this ruling, the DOL has 60 days to file a new appeal, which may not be likely. Employers are reminded that this ruling does not change the DOL’s Request for Information sent out earlier this year, ahead of preparation related to rulemaking to reconsider the entire salary threshold definition.

What are my next steps?

As an employer, you must still comply with the white-collar exemption "job duties" components when determining whether a role is exempt from the FLSA overtime requirements.

Additional information and background on the changes:

For more information regarding current FLSA overtime rule compliance, contact Thomas Schultz, PHR, or any member of Schenck’s Human Resources Consulting team at 800-236-2246.

Thomas Schultz, PHR, is a manager – HR Consulting with Schenck. He has more than 20 years of human resources experience, including building human resource systems and structures that match the changing needs of businesses. He brings a broad blend of skills in areas such as leadership coaching, employee relations, benefits, training and development, change leadership and employment law.