WHAT TO WATCH FOR IN 2018: THE NEW OVERTIME RULE, TAKE TWO

One of the most significant developments in employment law in 2017 was a federal district court in Texas declaring invalid the Obama Administration’s controversial new overtime rule that would have more than doubled the minimum salary level required to qualify for certain overtime exemptions under the FLSA. Although the business community won this battle, employers should be prepared for the U.S. Department of Labor (DOL) to issue a new rule in 2018 that increases the minimum salary level. Before considering what the DOL may do in 2018, it is important to consider what happened to the 2016 Final Rule.  In March 2014, President Obama issued a memorandum directing the Secretary of Labor to “modernize and streamline the existing overtime regulations for executive, administrative, and professional employees, which are commonly referred to as the “EAP” exemptions.  The regulations had not been updated since 2004.  Under the Final Rule announced in May 2016, the minimum salary level for exempt employees more than doubled from $455 to $913 per week, which was based on the 40th percentile of weekly earnings of full-time salaried workers in the South.  The Final Rule also included an automatic updating mechanism that adjusted the minimum salary level every three years.  In 2016, 21 states and more than fifty-five Texas and national business groups filed separate lawsuits against the DOL in the U.S. District Court for the Eastern...

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