Update: Stage Now Set for DOL to Adopt More Modest Salary Level for Overtime Exemptions

In his final ruling, Judge Mazzant clarified that he was not questioning the DOL's authority to adopt a salary level test as part of the overtime exemptions. Rather, Judge Mazzant explained that the Obama-era DOL had gone too far in adopting a salary level so high as to become the “de-facto” test for meeting the overtime exemptions. The law authorizes the overtime exemptions, explained Judge Mazzant, based upon whether the employee performs duties as an executive, professional or administrative employee. But the new overtime rule, with a salary level so high, essentially made the overtime exemptions based on pay, not duties. Hence, Judge Mazzant ruled that the overtime rule's high salary level exceeded the DOL's authority.

Within a few days of the final ruling, the DOL asked to withdraw its appeal of the preliminary injunction as moot, or no longer necessary, and the Fifth Circuit granted the request the following day.

So, What Does This Mean?

The Obama-era overtime rule is dead.

The DOL is authorized to adopt a salary level test as part of the exemptions, so long as deemed sufficiently reasonable as to not override the duties aspect of the exemptions.

The DOL is poised to review the salary levels currently in place and attempt, perhaps, a more modest salary level — which is estimated to be in the mid $30,000s.

Any new salary level test, however, must follow the process of new rule-making, which will take a matter of months at the very least.

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Tim K. Garrett is a member at Bass Berry & Sims PLC in Nashville, TN. He counsels employers on issues related to all aspects of labor and employment law. Reach him at [email protected].