Federal Judge in Texas Issues Final Ruling Striking Down New Overtime Rule

September 01, 2017 - Denny P. Major

By now, employers are certainly well aware that on November 22, 2016, a federal judge in Texas issued a preliminary injunction that effectively prevented the implementation and enforcement of the new Department of Labor (“DOL”) regulations regarding the exemptions from overtime for bona fide executive, administrative, or professional (“EAP”) employees.

See Nevada, et. al. v. U.S. Department of Labor, et. al., 218 F. Supp. 3d 520, 534 (E.D. Texas 2016).  As we previously blogged, the November 22nd ruling was not final and was effective “pending further order” of the court.

That “further order” came on August 31, 2017, when the same federal judge who issued the November 22, 2016 order issued a final ruling concluding that the new regulation “is invalid.” The judge determined that Congress intended the EAP exemption to apply to employees who perform executive, administrative, or professional duties, and that the new regulation fails to carry out that intent because it improperly uses a salary-level test that effectively eliminates the “duties” test.

It should be noted that the November 22, 2016 ruling is still on appeal with the Fifth Circuit, and the August 31, 2017 ruling is also subject to being appealed. However, the DOL has indicated that it does not intend to pursue the salary level of $913 per week that was a part of the new regulation.  As noted in our blog post dated July 26, 2017, the DOL has requested notice and comment before issuing a revised proposed regulation.  It will be interesting to see how the court’s treatment of the duties test in the August 31, 2017 ruling impacts the DOL’s revised proposed regulation regarding the EAP exemption.

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