The same Texas judge who temporarily blocked the implementation of last year’s overtime changes has now issued what experts are calling a final knockout to those changes.
Federal District Court Judge Amos Mazzant on Thursday struck down the overtime rules proposed during the Obama administration that would have greatly expanded the number of people due overtime pay.
The proposal, which would have made 4 million workers eligible for overtime, drew strong criticism from many business groups, particularly in the service industry and among nonprofits.
The proposal would have increased, from $23,660 to $47,476, the annual salary threshold under which employees would be entitled to overtime. The threshold has remained unchanged since 2004.
Mazzant’s ruling Thursday said the federal Labor Department under the previous administration overstepped its authority.
York attorney Anne Zerbe predicted the ruling will be the end of the overtime proposal.
“An appeal is unlikely, so I think business can breathe a sigh of relief,” said Zerbe, chair of the employment law department at York’s CGA Law Firm.
In the aftermath of the ruling, another specialist in employment law, attorney Jill Welch, a partner in the Lancaster-based firm Barley Snyder’s labor and employment practice group, said she expects to see a more modest increase in the salary threshold, perhaps to the $30,000-to-$33,000 range, more in line with an adjustment for inflation.
But determining who qualifies and doesn’t qualify for the exemption also needs to be established by whether an employee performs executive-level, or administrative or professional duties, not just by a higher salary, experts have said.
Congress’ intent in passing the overtime law was clear and unambiguous, Welch said – the overtime exemption applies to employees who perform “bonafide executive, administrative or professional capacity” duties, she said.
“This court’s decision … basically said, ‘You can use a combination of a salary and a duties test, but you just can’t set the salary so high (in raising it from the $23,000 to the $46,000 range) that you essentially eliminate the duties test’” for whether a person qualifies, Welch said.
“The court basically is saying, ‘The salary level is so high that for these 4.2 million people who are now covered by the overtime rules, you don’t even have to look at what they do to consider whether they’re exempt or not,’” she added. “That was not Congress’ intent.”
Zerbe said she expects regulators in the new Trump Administration “to consider a gradual increase that would not be so negative in its impact on businesses, that would maybe be implemented over time, and would not effectively ignore the job duties that are just as important in the analysis of what’s exempt and non-exempt” as the salary threshold.
Mazzant issued an injunction last November that halted implementation of the former overtime changes a week before a scheduled Dec. 1, 2016 start.
“HALLELUJAH!!!!!!!!!!!” Karen Young, president of HR Resolutions LLC in Lower Paxton Township, said Friday in an email.
“As a practitioner who works with small employers, this is outstanding news,” Young said. “Many of our clients were concerned with how they would function with their current staff size and the additional burden of making the choice between increasing salaries or budgeting/limiting overtime.”