On August 31 a Federal judge in Texas overturned the Department of Labor’s final rule increasing the standard salary level for determining which employees are classified as exempt from overtime under the Fair Labor Standards Act. The rule would have increased the salary levels from $23,660 to $47,476, requiring employers to pay overtime to salaried workers who earn less than $47,476 annually, regardless of exemptions covered by the “duties” test.
In granting summary judgment, the District Judge ruled that DOL could not create an overtime exemption based on salary alone and should at least consider an employee’s duties. The judge found that to do so, DOL has “exceeded its authority and gone too far with the Final Rule.” It remains to be seen however if DOL will appeal the decision.
Employers, including financial institutions, should be aware of the impact of this decision, that their executive, administrative, and professional employees with a salary of less than $47,476 (but not less than $23,660) will still qualify for potential exemptions based on the duties test. Thus, employees will enjoy the flexibility of maintaining a variety of duties and responsibilities while remaining eligible for overtime exemptions without the significant salary threshold increase set by the final rule. Note that the duties test remains unchanged, and WBA recommends institutions work with their Human Resources Department to determine whether employees may qualify for any exemptions.