Confusion remains over proposed federal overtime compensation rules

Trump puts them on hold, injunction remains

I have written several times in the past year about the Obama administration's proposed significant changes to the federal overtime compensation rules—and the federal court litigation to enjoin the enforcement of those rules. The federal court preliminary injunction blocking enforcement of the Obama administration's proposed rules, which were to take effect on Dec. 1, 2016, is still in effect.

At the moment, there is much confusion about the implementation of any new overtime rules. The Trump administration has advised the 5th U.S. Circuit Court of Appeals that it does not intend to proceed with implementing the Obama-era proposals. The Obama administration proposed to essentially double the annual salary necessary to be exempt from receiving extra pay for overtime work. The Trump administration may accept some of the Obama administration's proposals, reject others and revise yet others. The Trump administration is asking for public comments on how the Obama administration's proposals should be revised or jettisoned.

While the Trump administration appears open to some increase in the base salary necessary to qualify for an exemption from being paid overtime compensation, it is all but certain that the Trump administration will not go along with the Obama administration's proposal to double the salary necessary to qualify for an exemption from being paid extra money for extra work.

The Trump administration is giving some consideration to proposing new overtime compensation rules that account for regional cost of living differentials, type of industry, number of company employees and the like. One significant legal question that remains to be resolved by the courts is whether the federal Department of Labor (DOL) can alter the overtime compensation rules based solely on salary levels, or whether the DOL must also factor in the job duties test, i.e., white-collar versus blue-collar job duties.

We are still a long way—many, many months—from having clarity and finality on this important employer-employee relationship matter. Please feel free to contact me if you have any questions about the new overtime rules.

—Matthew T. Fitzsimmons