On November 22, a Texas federal district court halted the implementation of the new Department of Labor rule that increased the minimum salary level for exempt employees under the Fair Labor Standards Act (FLSA). Twenty-one states and various business groups filed suit challenging the rule, scheduled to take effect on December 1. The court determined that the Department of Labor exceeded its authority under the FLSA because the new rule creates a salary-level test for all exempt employees irrespective of their duties and responsibilities.
The FLSA requires that employees' pay is at least equal to the federal minimum wage. Employees who work over forty hours in a week are entitled to overtime pay of one and one-half their regular rate. Congress created exemptions to the overtime pay requirement in the FLSA, specifically excluding bona fide executive, administrative, or professional (EAP) employees. Since the FLSA passed in 1938, the Department of Labor has used its delegated authority under the Act to pass and revise regulations defining key terms such as "executive," "administrative," and "professional;" and creating tests to determine whether employees were qualified for exempt status. The proposed new salary-level test would have raised the minimum salary level from $455 per week to $913 per week, or from $23,660 to $47,476 annually "irrespective of an employee's job duties and responsibilities." The new rule would have impacted millions of workers.
Although the court agreed that the DOL has authority to regulate the types of duties an exempt employee must perform, it agreed with the challengers that the agency exceeded its delegated authority by setting a minimum salary level without consideration of job duties and responsibilities. In effect, the court held that the DOL was "supplanting" a duties test with a salary test, contrary to Congressional intent.
The preliminary injunction ordered by the federal district court halts the implementation of the salary-level rule nationwide, not just in the states that challenged the rule. The Department of Labor is considering possible appeal to the Fifth Circuit Court of Appeals.
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