In a recent budget hearing, U.S. Secretary of Labor Alexander Acosta indicated that the Department of Labor plans to re-assess the overtime rule issued by the prior administration and, in particular, the salary level set by the rule. As you may recall, the proposed rule would have raised the required salary threshold for the “white collar” overtime exemptions from $455 per week to $913 per week. Although the rule was scheduled to go into effect on December 1, 2016, a federal district court in Texas entered a nationwide preliminary injunction in late November 2016 that, in effect, hit the “pause button.” This decision is currently on appeal before the Fifth Circuit Court of Appeals and the Department has until June 30, 2017 to file its reply brief.
Secretary Acosta indicated in the hearing that the Department will likely issue a “request for information” in the near future regarding the overtime rule and its salary level. The request will solicit information and comments from the public that the Department can use in evaluating these issues. We view this announcement as signaling the Department’s willingness to abandon the litigation on the Obama-era overtime rule and starting a rule-making process that would result in a new overtime rule with a reduced salary threshold. In his confirmation hearing, Secretary Acosta stated his belief that the salary threshold set by the prior administration was excessive and that he would be open to a salary threshold in the neighborhood of $33,000 per year. Although nothing is yet official, this is yet another sign that the salary threshold of $913 per week will never actually go into effect.
We will be sure to update you on any additional developments on this issue as they arise.