Employment Law

The Uncertain Future of Overtime Pay for White Collar Workers

Background to The Fair Labor Standards Act of 2016

Since the implementation of the 1938 Fair Labor Standards Act, Americans have believed that our democratic way of life requires a fair wage for a hard day’s work.  That ideal was realized in the 1938 Act which provided for a minimum wage plus time-and-a-half for workers who worked more than 40 hours a week.  These overtime pay rules apply to most hourly workers and to some salaried employees.  In the early days, most salaried workers were covered by the law, but as the years went by with few updates to the overtime salary cap, more and more white-collar workers were left out in the cold.  They were classified as “exempt” from receiving overtime pay, and they often work many hours of overtime with no extra compensation.

The Fair Labor Standards Act of 2016 is the U.S. Labor Department’s attempt to remedy the situation and bring the threshold for exempt employees up to date by increasing the “standard salary” where an employee would be considered exempt from overtime pay and by providing automatic updates for the future.  The new law would raise the standard salary level for exempt employees from $455 per week to $913 per week.  The new law was scheduled to go into effect on December 1, 2016.

However, recent developments have made it uncertain if the 2016 increases will ever be implemented.  On November 22, 2016, U.S. District Court Judge Amos Mazzant granted an emergency motion for preliminary injunction that prevents the U.S. Department of Labor from enforcing the new overtime law.  The case, State of Nevada, et. al. v. United States Department of Labor, et. al. No: 4:16 CV-00731,  is a lawsuit filed by a coalition of 21 state governments, business groups and corporations seeking to prevent the new overtime rules from going into effect.  When the judge’s intent became clear, the Department of Labor (DOL) asked the Court to limit the injunction to those states involved in the lawsuit.  The judge refused and made the ban on the new law effective nationwide.

The new law, updating the minimum wage and increasing the salary level required to make employees exempt from overtime pay, is not dead yet, but its future is in real jeopardy.  Several groups are trying to combat the judge’s ruling.  The Texas AFL-CIO, representing 650 Unions, attempted to intercede in the lawsuit by filing a motion to intervene on December 9, 2016.  The business/corporate plaintiffs have filed papers to oppose the AFL-CIO having a voice in the lawsuit.  The judge has not yet decided on the motion.

Meanwhile, the DOL has asked the Texas Court to stay proceedings pending the outcome of its expedited appeal to the 5th Circuit Court of Appeals.  The DOL is asking the 5th Circuit to jump into the issue and rule on whether Judge Mazzant had a right to issue the preliminary injunction.  The Department wants the District Court to wait on any further action until the 5th Circuit makes its decision.  On December 15, the business plaintiffs filed in opposition to the DOL’s motion for a stay.  They have also opposed the appeal.

There is also opposition to the new rule in Congress.  In September, the U.S. House of Representatives passed H.R. 6094, a bill which would delay the new Fair Labor Standards Act from taking effect until June of 2017.  That bill has not yet been considered by the Senate.  There is also talk of the business community urging President elect Trump to block the new law.

Businesses claim the new law will be too costly to business and have a negative impact on the economy.  The DOL states that white collar workers desperately need the increase because there are people with earnings below the poverty line who are currently exempt from overtime pay.

“Final Rule: Overtime,” United States Department of Labor, www.dol.gov/WHD/overtime/final2016/. Accessed 22 Dec. 2017.

Lawless Robertson, Laura, “New Overt Regulation Put On Hold- U.S. Federal Court Judge Enjoins Implementation of FLSA Regulation,” The National Law Review, 22 Nov. 2016,www.natlawreview.com/article/new-overtime-regulations-put-hold-us-federal-court-judge-enjoins-implementation-flsa. Accessed 22 Dec. 2017.

“Overtime for White Collar Workers Overview and Summary of Final Rule,” United States Department of Labor, www.dol.gov/sites/default/files/overtime-overview.pdf. Accessed 22 Dec. 2017.

This website has been prepared for general information purposes only. The information on this website is not legal advice. Legal advice is dependent upon the specific circumstances of each situation. Also, the law may vary from state-to-state or county-to-county, so that some information in this website may not be correct for your situation. Finally, the information contained on this website is not guaranteed to be up to date. Therefore, the information contained in this website cannot replace the advice of competent legal counsel licensed in your jurisdiction.

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