Overtime Rule Invalidated by Federal Court in Texas
On August 31, a federal judge in Texas struck down an Obama administration rule implementing changes to the Fair Labor Standards Act (FLSA) overtime regulations that would have doubled the standard salary threshold for exempt employees. U.S. District Judge Amos Mazzant granted summary judgment to a coalition of states and business groups that had challenged the 2016 rule, agreeing with the plaintiffs that the U.S. Department of Labor (DOL) raised the minimum salary threshold so high that it made the duties test irrelevant.
As previously reported, the most significant change made by the rule was a substantial increase of the standard salary threshold for exempt employees – from $455 per week ($23,660 per year) to $913 per week ($47,476 per year). AGC and its members were concerned that imposing such a large and immediate increase might result in unintended consequences, particularly for small construction companies, construction employers in lower‐wage regions, and construction personnel.
The update to the regulations was originally set to take effect on Dec. 1, 2016, but the district court in Texas previously granted a nationwide preliminary injunction temporarily blocking the rule. Awaiting the court’s final ruling, in late July the Trump administration DOL formally published a Request for Information (RFI) on the 2016 changes. In line with AGC’s regulatory recommendations, the RFI is the first step the DOL is undertaking to seek public input on the 2016 rule and to assist in the development of a future notice of proposed rulemaking (NPRM) revisiting the regulations.
While Judge Mazzant’s most recent decision effectively vacates the rule, the DOL is still moving forward with the RFI, and AGC will continue to provide input to the DOL on the impact further changes to the FLSA might have on the construction industry.
For more information, contact Claiborne Guy at firstname.lastname@example.org or 703-837-5382.
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