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Texas Court Grants Summary Judgment Invalidating 2016 Federal Overtime Rule

Earlier today, the Texas federal district court that had issued a preliminary injunction in November 2016 blocking implementation of the Obama Administration’s revised overtime rule granted the plaintiffs’ motion for summary judgment, ending the case and leaving the injunction in place.  An appeal of the injunction is currently pending before the Fifth Circuit Court of Appeals.

The district court’s reasoning was similar to its reasoning in the order granting the injunction. Judge Amos Mazzant noted that in enacting the “white collar” overtime exemptions of the Fair Labor Standard Act (FLSA), Congress made clear that an employee’s duties should determine whether or not the exemptions apply.  In the 2016 overtime rule, by more than doubling the previous minimum salary level for exemption, the Department of Labor (DOL) set the threshold at a level that was so high as to “effectively eliminate the duties test” required by the FLSA.  As the Court explained:

This significant increase would essentially make an employee’s duties, functions, or tasks irrelevant if the employee’s salary falls below the new minimum salary level.  As a result, entire categories of previously exempt employees who perform “bona fide executive, administrative, or professional capacity” duties would now qualify for … exemption based on salary alone.… This is not what Congress intended …. [The] Final Rule … makes overtime status depend predominately on a minimum salary level, thereby supplanting an analysis of an employee’s job duties.

Judge Mazzant also concluded that the 2016 rule’s provision that would automatically increase the minimum threshold for exemption every three years also exceeds its authority under the FLSA and therefore is unlawful.  All eyes now turn to the Fifth Circuit, which will have at least one opportunity to examine the reasoning behind Judge Mazzant’s decisions on this crucial issue for employers.

© 2019 Proskauer Rose LLP.

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About this Author

Allan Bloom, Litigation Attorney, Proskauer Rose Law Firm
Partner

Allan Bloom is an experienced trial lawyer who represents management in a broad range of employment and labor law matters. He has successfully defended a number of the world’s leading financial services, investment management, technology, consumer products, telecommunications, publishing, insurance, construction, and lodging companies, as well as global law firms and cultural institutions, against claims for unpaid wages, employment discrimination, breach of contract, and wrongful discharge, both at the trial and appellate court levels.

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