In response to a legal challenge by 21 states and a few dozen businesses, a federal court has invalidated the Obama-era overtime rule that raised the exempt threshold to $47,476. The challengers argued that the changes were too drastic and would impose harsh costs on employers, which, in turn, might trigger job loss. In December 2016, a court put a hold on the policy, and last week, a federal court scrapped the ruling entirely. The court did not close the door to some increase in the threshold, but rather found that the Department of Labor (DOL) went too far in setting the salary threshold so high, saying, “This significant increase would essentially make an employee’s duties, functions or tasks irrelevant if the employee’s salary falls below the new minimum salary level.”
Many employment law practitioners think there will likely be some uptick in the threshold in the not-too-distant future, so employers should be prepared. The question is when and how much. The so-called white collar overtime regulations were last updated in 2004 and most agree that the threshold needs to be raised, including Labor secretary Alexander Acosta. DOL has already initiated a process for reworking the rule and is taking public comments through September 25.
For more information, we’ve compiled commentary from employment law attorneys and HR experts