United States: With Overtime Appeal On Hold, When Should We Expect New Regulations?

Last Updated: November 10 2017
Article by Steven F. Pockrass

The U.S. Court of Appeals for the Fifth Circuit has granted a motion filed by the U.S. Department of Labor (DOL) to hold in abeyance the DOL's appeal of a district court decision that invalidated controversial federal overtime regulations the Obama administration promulgated in 2016

Pursuant to the Fifth Circuit's order, the appeal will remain on hold pending the outcome of new rulemaking by the DOL. Although the DOL already has started on the rulemaking process, the issuance of revised final white-collar overtime regulations under the Fair Labor Standards Act (FLSA) still could be many months or even years away.

When the Obama administration issued the regulations that are the subject of the DOL appeal, the process took more than two years. 

It began in March 2014, when President Obama signed a presidential memorandum instructing the Secretary of Labor to update the regulations. At the end of June 2015, the DOL released proposed revised regulations. Those proposed regulations were published in the Federal Register on July 6, 2015, and the DOL accepted comments for 60 days. Following the close of the comment period on September 4, 2015, the DOL then issued its final regulations on May 18, 2016. The final regulations were scheduled to become effective on December 1, 2016, but were temporarily enjoined on a nationwide basis by a federal judge in Texas in late November 2016.  That same judge invalidated the regulations earlier this year, resulting in the appeal that is currently being held in abeyance.

If the 2016 regulations had gone into effect, they would have more than doubled the minimum salary requirement for the FLSA's major white-collar overtime exemptions from $455 per week to $913 per week.  Annualized, that would have been an increase in the salary threshold from $23,660 per year to $47,476 per year.

Secretary of Labor Alexander Acosta has indicated that he thinks the $47,476 threshold proposed by the Obama administration is too high, and that a more reasonable annualized threshold would be between $30,000 and $35,000.

In July 2017, the DOL under Acosta published a detailed Request for Information (RFI) in the Federal Register, in which it asked several questions seeking input regarding the appropriate salary level (or levels) and the duties tests for the white-collar overtime exemptions. The comment period for the RFI ended on September 25, 2017, and the DOL currently is reviewing the comments it received.

We expect that after completing its review of the comments, the DOL's next steps will be to publish a notice of proposed rulemaking with a new set of proposed regulations in the Federal Register, which again will be followed by a comment period, analysis of those comments, and then a new final rule.  

Notably, the overtime regulations fall under the purview of the DOL's Wage and Hour Division (WHD), which has been operating without a Division Administrator since President Trump took office. Cheryl Stanton, a former Ogletree Deakins shareholder who is President Trump's nominee for WHD Administrator, has been approved by a Senate committee, but still is awaiting full Senate confirmation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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