Federal Overtime Rules Still on Hold – Response from DOL due May 1

The Department of Labor (DOL) was granted an extension until May 1, 2017, to form its position and file its briefs regarding the legitimacy of the new federal overtime rules.

The revised federal overtime rule was set to take effect on December 1, 2016. The rule would change the salary level that must be met before an executive, professional or administrative employee can be classified as exempt from overtime. Under the rule, the federal minimum salary test would increase to $913 per week ($47,476 annually for a full-time employee); an employee paid less than this threshold would be guaranteed overtime pay. This salary threshold is more than double the current federal test and is also higher than California’s minimum salary test.

However, states and business groups sued to halt the rule and, about a week before the rule was to go into effect, a federal court issued a nationwide preliminary injunction blocking the DOL from enforcing the new federal overtime rule.

The DOL appealed the order. Since then, the rule has been on hold while litigation over the validity of the rule continues.

At first, the DOL asked for an expedited appeal, hoping to get a quick decision on the fate of the rule. But now, under the new administration, two requests for extensions have been filed and granted. The most recent request for an extension until May 1, 2017, was granted this week.

The DOL stated that additional time is “necessary to allow incoming leadership personnel adequate time to consider the issues.” The recent nomination of Alexander Acosta to become next Secretary of Labor is awaiting approval.

So for now the new federal overtime rules are still on hold and their future fate is uncertain.

What This Means for California Employers

California employers should continue to follow the California salary test to determine whether an employee can be classified as exempt under the executive, administrative and professional exemptions. In addition to the salary test, California employees must meet a strict duties test to be classified as exempt.

CalChamber members can use the Exempt/Nonexempt Wizard to help determine if a job position should be classified as exempt or nonexempt as well as read the Determining Exempt and Nonexempt Employee Status in the HR Library. Not a member? Learn more about what HRCalifornia can do for you.