Readers of this blog may recognize I have spilled a good deal of ink over the last two years discussing the impact of the Obama Administration’s efforts to increase the minimum salary for certain employees to be considered exempt from minimum wage and overtime requirements. See “Breaking News: Manufacturers Breathe Relief as Court Strikes Down DOL Overtime” (August 31, 2017); Time Running Out for Compliance with New DOL Overtime Regulation” (September 19, 2016); and “New Wage and Hour Requirements for Certain Employees of Manufacturers” (May 31, 2016).
Under current DOL regulations employees whose primary duties meet the standards for an exempt executive, administrative or professional employee will be exempt from minimum wage and overtime so long as they are paid on a “salary basis” (meaning they get the same salary every week regardless of the number of hours they work) and earn at least $455 per week ($23,660 annually). In 2016, the Obama Administration sought to increase this salary threshold to $913 per week ($47,476 annually). Last August, a Texas Federal Court struck down that regulation, holding that the U.S. DOL lacked the legal authority to act absent Congressional action.
Now, in a surprising move, the Trump Administration has appealed the Court’s decision and simultaneously signaled that it would seek to delay the appeal until a new Overtime Regulation could be promulgated. See Announcement here.
The DOL’s appeal brings more uncertainty for the manufacturing community in 2018. In striking down the Obama Administration’s authority, the Court held that the DOL could not change the salary threshold without Congressional direction. The Trump Administration’s challenge to that ruling, if successful, would mean Congressional action was not necessary. I would expect the Trump DOL would adopt a salary threshold in the mid-range, about $684 per week ($35,568 annually). But the rationale would open up the prospect that the next administration (whether Democrat, Republican or Unaffiliated) could change the threshold yet again.
2018 looks to be shaping up to be a very interesting year.